Slovaks back EU bail-out boost

Slovakia has finally backed expanding the size and powers of the EU bail-out fund, after a battle of wills which split the coalition and collapsed the government.

It is the last of the 17 eurozone nations to approve boosting the £385 billion fund, called the European Financial Stability Facility. The fund will be able to lend quickly to governments before they are in a full-blown crisis and help them boost banks’ health.

The Slovak parliament rejected the changes to the bail-out fund on Tuesday because a junior coalition partner, the Freedom and Solidarity party, opposed it.

In a desperate effort to force that party to vote in favour, prime minister Iveta Radicova tied the vote on the bail-out fund to a confidence vote in the government.

When the vote failed, her one-year-old government collapsed.

The Freedom and Solidarity party argued that Slovakia, the second-poorest country in the eurozone, should not have to help richer countries that had spent too much. However, the main opposition party, Smer-Social Democracy, then agreed to approve the expanded fund in a second vote.

Parliament then voted by 143-3 yesterday in favour of holding early elections in March.

Half-an-hour later, they approved boosting the bail-out fund – with 114 in favour, while only 76 votes were needed.

Ms Radicova welcomed the result and thanked politicians for a “very responsible” decision.

“This is a step to stop a debt crisis in Europe,” she said. “We belong to Europe, to the eurozone, and we sealed that today.”

However, she admitted it was “connected with a very high political price”.

Ms Radicova’s centre-right four-party coalition was formed after the general elections in June 2010.

Slovakia was under heavy pressure to repeat the vote quickly. Because big eurozone decisions require unanimous support, Slovakia’s earlier rejection threatened to hold up efforts to tame the debt crisis.