October 9, 2011 / 10:15 PM / 8 years ago

Slovak coalition in last-ditch talks on EFSF vote

* Coalition party SaS wants tighter EFSF mandate, ESM opt-out

* Leaders to hold last-ditch meeting on Monday

* Parliament vote due on Oct. 11, fate of government at stake

By Martin Santa and Michael Winfrey

BRATISLAVA, Oct 10 (Reuters) - Slovakia’s coalition leaders meet on Monday in a last-ditch bid to reach agreement on widening the mandate of the euro zone’s bailout fund before parliament votes on Tuesday.

Only Slovakia and Malta have yet to approve extra powers for the European Financial Stability Facility (EFSF) in its fight against the spiralling sovereign debt crisis, while the other 15 euro zone members are already debating longer-term measures.

The small liberal Freedom and Solidarity (SaS) party argues that the zone’s second poorest member is being asked to pay more than its fair share, but says it is still open to negotiation.

“We have the will. We will negotiate until the last minute,” Richard Sulik, the parliamentary speaker and head of SaS, said in a TV debate on Sunday.

All euro countries must give the green light to boost the EFSF’s effective lending capacity to 440 billion euros ($594 billion), and allow it to buy states’ debt, recapitalise banks facing solvency troubles and provide precautionary credit lines.

Both Italy and Spain were downgraded by the credit rating agency Fitch on Friday, underlining the urgency of measures designed on particular to shield other euro zone countries from Greece’s spiralling economic and debt crisis.

Prime Minister Iveta Radicova can be sure of getting EFSF approval through the Slovak parliament eventually. But if SaS does not back her, she will have to rely on the opposition, who have demanded a cabinet reshuffle or a fresh election as the price for their support.

Sulik says Slovakia should not have to pay for the mistakes of Greece and others who have overspent and overborrowed.

He said the average Slovak would have to work 300 hours to pay for their EFSF contribution, against 120 hours for a German.

PAYING HIGHEST PRICE

“We are going to support countries like Italy via bond buys, we will be saving French banks holding billions in assets and our salary is the lowest in the euro zone,” Sulik said.

“We will pay the highest price.”

The SaS says it will vote ‘yes’ to the EFSF only if Slovakia’s participation is restricted, and it stays out of the planned permanent rescue mechanism, the ESM.

Sulik said on Sunday he was sticking by his demand for a body that would vote on each stage of Slovak EFSF participation.

If SaS does block approval, Radicova may choose to tie a second ballot to a vote of confidence in the government.

Or she could go straight to the centre-left opposition Smer party to secure its support in return for the government’s resignation.

Radicova has said she will secure EFSF approval by Oct. 14, so that European Union leaders can discuss it at a meeting that starts two days later.

SaS’s popularity has risen slightly thanks to its stance on Europe, but polls suggest Slovaks, whose purchasing power and average salaries are far below those of the Greeks, are evenly split.

“I don’t like it” said Stefan Matolak, a 35-year-old sales manager in the northern Slovak town of Stara Lubovna.

“We entered the euro thinking we’d be equal partners, but they’re living high on the hog, and we aren’t. It’s not fair.”

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