The Slovak parliament’s rejection of the European Financial Stability Facility and the collapse of the Slovak government on Tuesday shocked much of Europe. The vote’s outcome should not have come as a surprise, since the ruling center-right coalition never had enough votes to pass the unpopular measure. One of the coalition members, the libertarian-leaning Freedom and Solidarity party (SaS), refused to vote for the EFSF, arguing that poor but reform-oriented Slovakia should not have to bail out richer but stagnating Greece.
It is likely that the Slovak parliament will approve the EFSF with socialist support in the coming days, but the assertiveness of the SaS could mark the beginning of a new, more democratic, chapter in European politics.
Since 2010, Slovakia has been governed by a coalition of four center-right parties that replaced the socialist government of Premier Robert Fico. The new government promised less corruption and a better stewardship of the public purse, and made improvements on both counts.
It promised to make investment and entrepreneurship in Slovakia easier by learning from high-growth economies like Singapore, and the welfare state much more efficient by introducing a negative income tax and slashing the overweening welfare bureaucracy.
The driving force behind many of the planned reforms was the SaS and its leader, Richard Sulik. Sulik was one of the father’s of the Slovak flat tax reform and is the speaker of the Slovak parliament. The SaS had much at stake in seeing the center-right coalition succeed. Yet, when faced with the choice between its principles and the government’s survival, the SaS chose the former.
The SaS has repeatedly criticized the tendency of the European politicians to ignore important but unpalatable provisions of the EU treaties, including the Maastricht Treaty’s debt and deficit criteria for accession to the eurozone, and the Lisbon Treaty’s ban on bailouts and buying of sovereign bonds by the European Central Bank. An economist by training, Sulik has warned against moral hazard as countries postpone or avoid reforms in expectation of foreign help, and advocated in favor of a Greek default and exit from the eurozone.
But it was his attack on the inequity of the Greek bailout that gained him both domestic support and international following.
Since the collapse of communism, Slovakia has undergone many painful but necessary reforms. Slovaks have privatized their industries, slashed their public workforce, liberalized their labor market, and improved their business environment. The Greek government has postponed difficult economic decisions, preferring to borrow and spend instead. According to the Fraser Institute’s Economic Freedom of the World index, Slovakia had the 13th freest economy in the world in 2009 while Greece came in the 81st place. Because of their free-market reforms, the Slovak economy has been growing relatively fast, peaking at 9 percent growth in 2006. But, thanks to four decades of communist stagnation, the country remains poor, with a GDP per capita of $16,200 against Greece’s $27,240. Why, the SaS asked, should the reform-minded but poor Slovaks bail out the richer but more complacent Greeks to the tune of 7 billion euros?
Typically, the response from Brussels has been to ignore such arguments, demonize the opponents of bailouts as irresponsible or extremist, and warn that without bailouts the European Union itself will break up. Indeed, 16 eurozone legislatures have already approved the EFSF in spite of widespread opposition in many countries and there is little doubt that Brussels will get its way in the end.
Like the Danes and the Irish before them, the Slovaks will be forced to vote until they get it “right” and the EFSF will probably be approved with the support of the opposition socialists in the coming days.
But the Slovak vote may be a harbinger of things to come. The dissatisfaction with the EU and the euro is growing, and so is the number of national politicians willing to speak their minds. If Sulik and his fellow SaS parliamentarians succeed in doing nothing else than showing that everyone has a right to be heard, the drama of Tuesday’s vote in the Slovak parliament will have been worth it.