Fate of Eurozone bailout rests on Slovak politician Richard Sulik
For a man accused of holding an entire continent hostage, Richard Sulik cuts a modest figure. With his shiny pate and geeky glasses, he looks more like a mild-mannered economist than a rough-and-tumble politician.
In fact, he’s both. But it’s as leader of the Freedom and Solidarity party in oft-overlooked Slovakia that Sulik finds himself in the unfamiliar glare of the international spotlight. He has the power, some say, to save Europe’s economy or push it over the precipice, with serious consequences for the rest of the world.
The Slovak parliament is scheduled to vote Tuesday on a plan to beef up Europe’s bailout fund for financially strapped nations such as Greece. Most experts agree that broadening the fund’s powers is a crucial, if limited, step in taming the debt crisis that has had financial markets somersaulting and fed worries about a double-dip recession.
Fifteen of the 17 nations that use the euro currency, including heavyweights Germany and France, have signed on to the plan, with Malta expected to approve it within days. But it requires approval by all the Eurozone countries, and a thumbs up from Slovakia, which will probably be the last to vote on the measure, is in grave doubt.
For that, thank Sulik. Why, he asks, should his compatriots, among the poorest residents in the Eurozone, open their wallets to bail out the Greeks, who are not only richer but whose government dug its own hole by irresponsible overspending?
Sulik’s party is only a junior member of the fractious ruling coalition in Bratislava, the Slovak capital. But if he withholds his support, as he is threatening to do, the plan to strengthen the bailout fund to $600 billion will not have enough votes in parliament. The defeat would send Europe scrambling for an alternative and could set off a catastrophic chain reaction through world markets.
That Sulik, 43, could torpedo the plan illustrates the handicaps on decision-making that have made Europe’s collective response to the debt crisis so slow and inadequate.
Because of the insistence on unanimity, a man whose party drew just 12% of the vote in the Slovak general election last year now wields, in effect, veto power over a rescue program endorsed by more populous and more influential nations in the Eurozone. President Obama won seven times more votes in Los Angeles County alone in 2008 than Sulik’s party did in all of Slovakia in 2010.
Rules designed to protect the sovereignty of European Union member states, both big and small, are now acting as a major drag on the bloc’s ability to combat a crisis that some say could ultimately tear it apart.
“In many ways it is absurd” that a lone holdout can trump all the other countries, said Janis A. Emmanouilidis, an analyst at the European Policy Center in Brussels.
But though the situation may strike some as undemocratic, “that’s how the EU is constructed; it’s part of our DNA,” Emmanouilidis said. “We’re not ready to surrender that.”
Trying to engineer a consensus among the 27 nations of the EU, or just within the Eurozone, is a tough task even in good times. The current financial and economic emergency has magnified that difficulty.
Since Greece’s runaway budget deficit triggered the debt crisis 1 1/2 years ago, the continent’s leaders have struggled to come up with a united approach. Yet when they finally agree on an action plan, events have often overtaken them, giving the impression that they are constantly solving yesterday’s problems.
Indeed, most experts say the current proposal to fortify the bailout fund is already insufficient. The plan was put together by Eurozone leaders nearly three months ago, after weeks of squabbling, but has had to wait for ratification by national parliaments, testing investors’ patience.
“It’s a perfect storm, driving countries apart and creating divisions and conflicts, and the EU does not have the political infrastructure to handle it,” said Christoph Meyer, an expert on European politics at King’s College London.
The torpid response has given ammunition to those in Brussels who yearn for a more federalist setup in which centralized institutions such as the European Parliament could make quick, binding decisions, instead of relying on getting each member state’s government to sign off on policies.
Imagine the difficulties in the United States, critics say, if legislation affecting the entire country had to be approved by the government of every state, rather than by Congress.
“Sovereignty is fine, but you cannot allow a small stakeholder in the community to slow down all the others,” Jose Manuel Barroso, president of the European Commission, the EU’s executive arm, told reporters recently.
In a speech before the European Parliament in the French city of Strasbourg, Barroso said, “Today, we have a union where it is the slowest member who dictates the pace.”
In Slovakia, Sulik is under heavy pressure from his coalition partners and other European leaders to set aside his opposition to the beefed-up bailout fund for the greater good of EU solidarity and global financial stability.
But Sulik, an ardent free-market liberal, has been adamant in his view that the rescue fund and its emergency loans to distressed nations are merely a hugely expensive way to buy time rather than a real solution to the crisis. Better to let Greece declare bankruptcy than to throw good money after bad, he believes.
Under the plan, Slovakia would be required to contribute about $10 billion in loan guarantees, more than 10% of the country’s entire gross domestic product.
“The whole idea of the euro bailout is wrong,” Sulik told an Austrian newspaper. “It tries to solve the debt crisis with more debt.”
For the moment, there is no public talk by Eurozone officials of a Plan B if Slovakia should reject the strengthened bailout fund. Many analysts believe that Sulik and his party will eventually cave in, if only to avoid the international opprobrium that would come were they to bring down the plan.
He reportedly has offered a compromise in which he and his party would support the bailout fund in exchange for a greater say in how it operates. But news reports suggest that Slovak Prime Minister Iveta Radicova would reject such a deal because it would make the fund practically unworkable.
And so the rest of Europe and investors around the world nervously await the outcome of Tuesday’s vote.
Sulik is unapologetic.
“If we have the right of a veto then we have to have the right to use it. It is our right to say no,” he said in a recently published interview. “I do not see why anyone should be angry with us.”
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