Slovak party threatens to derail EU bailout deal

BRATISLAVA (Reuters) - Slovakia should reject any changes to the euro zone's rescue fund, parliamentary speaker Richard Sulik, who also heads a junior government party, said on Monday, raising a potential threat to plans to tackle the bloc's sovereign debt crisis.

All euro zone countries have to ratify an increase in the effective lending capacity of the European Financial Stability Fund and new powers for the bailout vehicle before the changes, approved by euro zone leaders in July, can come into effect.

Slovakia is one of a number of countries in which parliamentary approval is needed, with a debate on the issue likely to come in September.

The center-right government holds only a small majority in parliament and without Sulik's Freedom and Solidarity (SaS) party, it would need support from the opposition SMER party, a fierce critic of the administration.

"We will do everything we can in order for the parliament not to approve it," Sulik told reporters.

Sulik strongly opposes the agreement to boost the EFSF, particularly its new powers to buy government bonds on the open market. His objections could hamper the quick implementation of the deal called for by both German and French leaders and the European Central Bank to stem the deepening debt crisis.

The ECB started buying Italian and Spanish debt on Monday to stabilize markets on the view that the beefed-up EFSF would take over the burden later.

Martin Bruncko, Slovakia's envoy to the EFSF said a Slovak 'no' could block the increase in its size and its powers to lend or buy bonds on the secondary market.

But Sulik was unmoved.

"Slovakia cannot simply be responsible for all the pain in the world ... I can clearly say what Slovakia must not do, which is to sign up for big billions of euros which one day -- be it in five or 15 years, but one day certainly -- (the fund will) have to pay," he said. "I will not sign under that."

(Reporting by Martin Santa, editing by Jan Lopatka and Catherine Evans)