Euroland – a Badly Battered Boxer

The pressure is on as a 17-nation-decision-making Euroland staggers from pillar to post like a badly battered boxer.

Flag of the President of Slovakia

Flag of the President of Slovakia – Image via Wikipedia

Here is the latest Open Europe news summary on faltering efforts to resolve the sovereign debt/bank liquidity crisis:
Slovakian Government falls as Parliament rejects EFSF expansion;
Sulik: “I’d rather be a pariah in Brussels than have to feel ashamed before my children”
Following an all-day debate yesterday, the Slovakian parliament voted last night to reject the expansion of the EFSF, which would have seen Slovakia’s loan guarantees under the bailout fund increase from €4.4bn to €7.7bn. As a result Slovakian Prime Minister Iveta Radicova’s four-party coalition government has effectively collapsed, as the EFSF vote was tied to a vote of confidence. Radicova’s coalition partners Freedom and Solidarity (SaS) and the main opposition party Smer abstained en-masse, meaning the proposal only received the support of 55 out of 150 MPs.

SaS’s leader Richard Sulik has attracted a lot of criticism from coalition colleagues, with the Prime Minister’s advisor blaming him for the fall of the government, saying: “He destabilised the political situation, damaged Slovakia’s name and allowed Slovakia to be thought of as untrustworthy partner in the EU by being stubborn”. However Sulik, who opposed shifting the debt burden onto Slovakian taxpayers told fellow MPs: “I’d rather be a pariah in Brussels than have to feel ashamed before my children, who would be deeper in debt should I back raising the volume of funding in the EFSF bail-out mechanism”.

The Slovakian parliament is nonetheless expected to pass the EFSF expansion later this week as Smer leader Robert Fico has said that he “supports the bill on an ideological level” but that his party’s support is conditional on fresh elections following the vote. Slovakia’s President Ivan Gasparovic will now conduct negotiations with all the parties in order to decide whether to try to form a new government or call an early election. Political analyst Juraj Marusiak is quoted in Pravda saying that: “They will ratify the EFSF at the second attempt, the question is what price will the coalition be willing to pay. It seems that the price will be paid to Smer instead of SaS”. Open Europe’s Raoul Ruparel appeared on BBC World news discussing the Slovakian situation and the eurozone crisis.

Reaction to the Slovakian vote in Germany has been mixed; Bild’s deputy editor Nicolas Blome argues that: “Slovakia is poor and has put in a lot of effort to drag itself out of the mire. Greece is richer, but has put off similar efforts… Solidarity is not a one-way street”. Meanwhile in Suddeutsche, Cerstin Gammelin writes that one country should not be able to endanger the whole eurozone club, and argues that “new rules are required or else [the eurozone] will remain a hostage to the domestic politics of 17 countries”.
FT WSJ CityAM Times European Voice Guardian Telegraph Mail Irish Independent Der Standard ARD BBC 3 BBC 4 EUobserver FAZ Suddeutsche Le Figaro Le Monde Pravda Pravda 2 Pravda 3 Pravda 4 Pravda 5 Pravda 6 Slovak Spectator Slovak Spectator 2 Hospodarske Noviny Hospodarske Noviny 2 Hospodarske Noviny 3 Hospodarske Noviny 4 Sme Sme 2 Bild: Blome

Berlusconi to require a vote of confidence in the lower house of Italian parliament;
Early elections might take place even if Berlusconi wins the vote
Italian Prime Minister Silvio Berlusconi will deliver a keynote speech in the lower house of the Italian parliament this afternoon, setting out his government’s priorities for the following months. He will then demand that a vote of confidence be held, most likely tomorrow. If Berlusconi fails to secure a majority, he will almost certainly have to resign. An article in Il Corriere della Sera suggests that early elections could take place next year even if Berlusconi wins tomorrow’s vote, due to growing pressure from junior coalition partner Lega Nord. Berlusconi’s decision to require a vote of confidence comes after the lower house of the Italian parliament failed to approve the government’s 2010 budget review yesterday.

Meanwhile, the Italian Court of Auditors yesterday rejected the Italian government’s draft reform of the tax system – a key piece of the set of austerity measures aimed at achieving a balanced budget by 2013 – due to uncertainties over its financial coverage.
Repubblica Repubblica 2 Repubblica 3 Corriere della Sera Corriere della Sera 2 Corriere della Sera 3 La Stampa Il Sole 24 Ore Straneuropa Rai News 24 IHT WSJ FT

Greece set to receive next tranche of bailout funds, despite missing deficit targets;
CDU considering EU Treaty change within the next year
The EU/IMF/ECB review of the Greek bailout was completed yesterday, with the review team stating that it expects Greece to receive the next tranche of bailout aid, despite Greece not being able to reach its deficit target for this year. The so-called ‘troika’ also suggested that it expects Greece to meet its fiscal targets for next year, but needs further austerity to do so in 2013 and 2014. Open Europe’s Raoul Ruparel is quoted in the Telegraph, saying, “The EU and IMF have now dropped all pretence that Greece can achieve its original deficit targets, but look set to pay out the next tranche of Greek bailout aid regardless. This may be necessary to avoid a disorderly default, but it is imperative that the EU takes these failures into account when deciding the future of the second Greek bailout.”

In an interview with FAZ, CDU Secretary-General Hermann Gröhe has said that his party is considering the possibility of an EU Treaty change within the next year. Gröhe suggested that “we need the possibility that eurozone countries which breach the Pact would be sued before the European Court of Justice in the future”, adding that “our goal should be to be ready within one year”. Focusreports that an Emnid poll shows that 37% of German voters could imagine voting for a euro-critical party. This number tops two thirds among voters of the FDP and the left.

A group of almost 100 commentators, led by George Soros, have written a letter urging euro area countries to move towards political union. In City AM Alistair Heath argues, “No system can survive if it is sufficiently hated or despised by most of the population. Those who believe that the Eurozone needs to push through radical fiscal integration and federalise vast amounts of sovereign debt are playing with fire.”
European Voice Irish Times Irish Independent BBC EUobserver Independent Les Echos Telegraph Reuters Handelsblatt Kathimerini FT CityAM 2 Times Express Irish Times FT 2 FT 3 FT 4 BBC 2 Expansión El País Le Figaro Les Echos Trichet’s speech Le Figaro 2 Sueddeutsche De Morgen Les Echos 2 Tribube de Genève Kathimerini Bloomberg Le Monde AFP Les Echos 3 FT: Letter Irish Times El País: Soros et al. El País Times: Bremner Independent: McRae WSJ: Nixon WSJ: Review & Outlook City AM: Heath FT: Wolf FT: Altman FT: Gros City AM: Drake FAZ interview Groehe DAPD Focus

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