Slovakia first euro-zone nation to reject Greek aid package

The Slovaks have apparently balked at the Greek aid package hammered out in crisis this past weekend.  While they have not formally rejected the package, the Slovak Prime Minister has said he cannot grant Greece a loan before it fulfils its commitments.  The Austrians have also chimed in with words of doubt. Clearly, the Greek aid package is not a done deal yet.

Below is my translation of the story via Diário de Notícias, a Portuguese daily:

Slovakia produced the first crack in European cohesion on financial aid to Greece in expressing reservations about its contribution to the joint effort, two days after the announcement of the agreement by the eurozone countries.

The Slovak Prime Minister Robert Fico said Monday that his country cannot "grant any loan to Greece" before the country "fulfils its obligations" to reduce costs.

"Any decision related to helping (Greece) should be preceded by an effective decision of the Greek Parliament to reduce the social benefits that the country is unable to finance," Fico said. "Personally, I think that Parliament will be unable to approve the austerity plan," he added.

Fico also suggested that the Slovak loan of 800 million euros – of a total of 110 billion to be allocated over three years to the Hellenic State by the eurozone countries and the IMF – cannot be approved until the next government, after the general elections of June 12.

Meanwhile, the Austrian Finance Minister, Joseph Pröll, today warned that Europe is "losing patience" with Greece. "When we watch the protests, our patience, mine and the rest of Europe’s, is almost at its limit," he said.

Pröll urged the Greek government to "clearly explain" to the population that the austerity measures are "absolutely necessary" to overcome the serious crisis in the country.

In its initial reaction, the European Commission said today that "national procedures have different calendars, but we dismiss any possibility of setting aside the decision to activate the mechanism" to help Athens.


Eslováquia causa primeira fractura no acordo sobre ajuda à Grécia – DN

  1. Scott says

    This is like paying my friend ten dollars who owes me eight dollars when I owe another friend twelve dollars. My spam and ammo are looking good here.

  2. Anonymous says

    is it required the EU be unanimous for the aid to greece to occur? What if for example slovakia refuses (or delays), will the EU move forward anyways but with a smaller bailout?

  3. Anonymous says

    Great info. Many thanks!

  4. Edward Harrison says

    The Slovaks are contributing a tiny amount here. That they could cause this to fail demonstrates how euro-zone procedures are unworkable. What Europe needs is a PRE-funded mechanism to avoid the politicizing of economic events.

  5. Olivier Travers says

    How about we stop economicizing political events instead? What’s going on in Greece is the bill for paid-for votes coming up for payment. Let’s not confuse that with the real productive economy. More power to the Slovaks. EMU was not supposed to be about bailouts at all.

    1. Edward Harrison says

      No, the euro-zone was not supposed to be about bailouts. That is my point. With an effective fiscal transfer mechanism, it wouldn’t have to be. If you had a pre-funded fiscal mechanism to support countries as an automatic stabilizer against the unharmonised EU fiscal and economic regimes, you wouldn’t need a bailout.

      Obviously, it would be more desirable to have a monetary union of more harmonised countries but the US states are not harmonised either. What US states do have is automatic stabilzers.

      The point is Slovakia wouldn’t have a say or have to balk at a bailout because any fiscal transfers would be pre-funded and to the degree the Greeks still couldn’t get their finances in order, they would default WITHOUT contagion which is the real problem here. As it is set up now, not only do you get a political response to an economic problem, but you also get a bailout which is a moral hazard and contagion which imperils the union.

      1. Olivier Travers says

        As a native of France who lived in Germany, Italy, and Portugal, I don’t see the EU with its current composition ever converging nearly to the same level as US states did (as diverse as they still are), for a variety of historical and cultural reasons. That means “automatic stabilizers” would mean perma-bailouts in practice. Just ask Northern Italians about the south. This is unsustainable at the political level, because Europeans think of themselves as belonging to very distinctive nations first, and distant and recent union second (if they feel they belong in that union at all – Maastricht was far from a slam dunk when we ratified it). People will begrudgingly accept social transfers within their borders, but they’re not going to stand for massive help outside of them, especially to help people retire earlier than they do.

        Greece already got a lot of EU money from the regional structural fund. Look how well they improved their productivity thanks to it… this union is plainly not working.

        1. Edward Harrison says

          I agree with the thrust of the comments but the bailout rhetoric is not accurate. Let’s be clear and distinguish between automatic stabilizers/fiscal transfers and bailouts then. What is now being conducted is a bailout. What I am proposing (but never worked for many of the reasons you gave) is a Amerifinication of the Euro-zone, the United States of Europe.

          I would agree that the United States of Europe is probably ludicrous for the reasons you gave, but that is the only way to structure this.

  6. Mike Razim says

    I’m sure they won;t be the last country to be outraged by the plan. Even Greek citizens are outraged at what the country is planning to do in order to pay the money back as seen by these riots:

Comments are closed.

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