To expand a little bit on yesterday’s Slovakia happenings, I think much of the original reporting on this was somewhat confused and the parliamentary no vote isn’t necessarily that consequential. To see why, let’s step back and remember what we’re talking about. The leaders of the big Eurozone states decided that they want to expand something called the European Financial Stabilization Fund in order to be able to backstop Portugal and Ireland in the event of a possible Greek default. This requires the unanimous approval of the Eurozone parliaments, which includes Slovakia. All of them except Slovakia already agreed, and yesterday Slovakia said no.
But — and here’s the tricky part — the EFSF expansion actually seems to have majority support in the Slovak parliament.
To understand what’s happening here, you need to look back at the outcome of the 2010 elections. Then-incumbent Prime Minister Robert Fico led the social democratic Smer party to capture the largest number of seats. But a coalition of four substantially smaller center-right parties collectively had a majority in parliament and used it to form a governing coalition. Slovakia’s Prime Minister Iveta Radičová supports the EFSF expansion, as does her Slovak Democratic and Christian Union party and two of its three coalition partners. The problem is that one of the three coalition partners doesn’t support the EFSF expansion and Smer doesn’t want to bail the prime minister out by delivering the votes she needs to pass the bill. But they’re not determined to kill the bill either, they just want to use it as leverage. It’d be as if Nancy Pelosi withheld Democratic votes from the TARP legislation unless Bush and Boehner agreed to make some separate concessions on taxes and SCHIP.