LONDON – Lawmakers in Slovakia on Tuesday rejected a proposal to beef up Europe’s bailout fund for debt-stressed nations, but supporters are hopeful that the measure will pass in a second vote expected to take place within days.
The ruling coalition of Prime Minister Iveta Radicova collapsed after failing to gather enough votes from the Slovak parliament in favor of the measure, an outcome she had warned would be tantamount to a vote of no confidence in her government.
The plan for a strengthened bailout fund, which is widely seen as imperative for Europe to tame its growing debt crisis, was torpedoed in parliament by a junior party within Radicova’s own coalition.
In a tense showdown after hours of impassioned debate, the libertarian Freedom and Solidarity party refused to back the measure, saying that Slovaks should not be on the hook to bail out richer but financially reckless nations such as Greece.
Only 55 lawmakers voted in favor, well short of the necessary majority of 76. The rest of the 150 members of parliament abstained or were absent.
The expanded bailout fund, with a projected lending capacity of about $600 billion, requires the ratification of each of the 17 countries that share the euro currency. All but Slovakia have already given their approval.
The chief Slovak opposition party backs the bailout fund in principle, but its leader vowed to withhold support until a second vote in order to trigger the collapse of the government and force an early election in the coming weeks, which the party hopes to win.
With the Radicova coalition toppled, the opposition party agreed late Tuesday to work with other politicians to hold a repeat vote quickly, most likely by week’s end, in order to minimize turmoil in the global markets. But many investors are apt to take fright anyway at the new delay in getting the beefed-up bailout fund up and running.
The wrangling in Slovakia provided yet another example of how national politics have hindered strong collective action by Europe and undermined its credibility in the face of the most serious challenge to confront the euro. The need for unanimous approval of eurozone states has allowed a relatively small nation of 5.5 million people to exercise a veto over a plan approved by the parliaments of 16 other countries, including heavyweights Germany and France.
Investors watched nervously throughout the day Tuesday to see how the political drama in Bratislava, the Slovak capital, would unfold.