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Slovakian politicians work toward OK of euro bailout bill

By Karel Janicek and Don Melvin

Associated Press

Published: Tuesday, Oct. 11 2011 10:16 p.m. MDT

Richard Sulik, bottom center, leader of the Freedom and Solidarity Party and Parliamentary Speaker of Slovakia during a speech at a Parliament session during which the lawmakers will vote about the approval for more power to EU bailout fund in Bratislava, Slovakia, Tuesday, Oct. 11, 2011. Slovakia is the last eurozone country to vote on the fund.

Associated Press

BRATISLAVA, Slovakia — Slovakia's Parliament rejected a key euro bailout bill Tuesday, threatening Europe-wide efforts to ease a debt crisis that is threatening the global economy. The vote triggered the collapse of the government, but the outgoing prime minister and her main opponent both said they would now work to approve the bill quickly.

The agreement to talk came shortly after Parliament voted against an expanded euro bailout fund — a vote that Prime Minister Iveta Radicova had tied to a confidence measure. Parliament is scheduled to convene again Thursday, but it is not clear when another vote will be held.

The eyes of officials and investors around the world are on the small central European country because expanding the fund requires the approval of all 17 countries that use the euro currency. Sixteen countries have already approved, and now Slovakia, with a population of just 5.5 million people, holds in its hands the fate the financial plans of the wider 17-nation eurozone and its 332 million citizens — and by extension, the global economy.

But the statements of the country's leading politicians late Tuesday left little doubt the Slovakian Parliament would approve the measure.

"We decided that we have to do it as soon as possible," Radicova said after announcing her party would hold talks with the primary opposition party, Smer-Social Democracy, led by former Prime Minister Robert Fico.

Fico took the same line. "Slovakia has to approve the fund," he said.

Fico and his party had always supported expanding the fund expansion in principle, but had said it would vote yes only if the government agreed to call early elections.

Although approval of the measure seems likely, the drama and brinkmanship highlighted what has become a major issue in Europe's debt saga: In a system where unanimity is required, even small countries wield great power.

Because major eurozone policies need the approval of all 17 countries that use the currency, Slovakia's vote — the last — carried immense weight. For weeks it appeared certain it would reject boosting the bailout fund, unnerving financial markets and threatening the future of Europe's plans to fight the crisis.

Experts said EU officials could possibly find a way around a Slovakian rejection of the bill to boost the powers and size of the bailout fund, the European Financial Stability Facility, or ESFS — but that doing so would carry costs to European unity.

In the longer-term, the drama seems sure to add momentum to the push for nimbler rules to govern the 17-country eurozone, where government reaction to the unfolding crisis has seemed for many months to be behind the curve.

That push has been gathering momentum for some time.

In August, the leaders of France and Germany, President Nicolas Sarkozy and Chancellor Angela Merkel, proposed that the heads of the eurozone countries elect the president of a new "economic government" who would direct regular summits to respond to the continent's financial crisis.

And in September, Jose Manuel Barroso. the president of the European Commission — the European Union's executive arm — decried what he called "the constraint of unanimity."

"The pace of our joint endeavor cannot be dictated by the slowest," Barroso told the European Parliament.

At issue now is an agreement reached by the eurozone leaders in July 21 to enlarge the EFSF's capital guarantee from (euro) 440 billion to (euro) 780 billion. Slovakia would contribute about 1 percent, or (euro) 7.7 billion. In addition, if the changes are approved, the facility would have new powers and able to prop up government bond markets and help put new capital reserves against losses in banks.

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