Monday, October 17, 2011

Why Slovakia Said No

Slovakia’s parliament voted against the expansion of the European bailout fund, the EDSF that would’ve gone to bailout Greece. Not only does this vote have consequences for Europe at large, who is struggling to contain a far reaching debt crisis, but also caused the collapse of Slovakia’s coalition government.

The Freedom and Solidarity party failed to support Prime Minister Ivetta Redicova arguing that Slovakian taxpayers should not have to bail out Greece because Slovaks don’t make much more than Greeks on average and furthermore Slovakia implemented austerity measures Greece didn’t. The measure will likely pass on the second vote, with the opposition having accomplished its’ goal of bringing down the government.

There is something to be said in my view for smaller countries not wanting to bail out bigger countries. Smaller countries typically have less money to spend and have instituted austerity measures. Meanwhile, bigger countries because of their size have engaged in a culture of “spend baby spend”!

As time goes by, it’ll be interesting to whether other countries follow Slovakia’s example and say no to the big guys. This was the beauty and miscalculation of the eurozone. It gives everyone an equal voice, but one country, even tiny Slovakia can hold a European powers fate in its’ hands.

The reason Slovakia said no this time, appears domestic…will Europe be this lucky next time.

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