European Leaders Press Slovakia to Reverse Anti-Bailout Vote

Posted October 12th, 2011 at 10:00 am (UTC-5)
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European leaders are pressing Slovakia to quickly reverse its vote against expanding a bailout fund for the continent’s financially troubled countries.

German Chancellor Angela Merkel, whose country has Europe’s biggest economy, warned Wednesday that the global economy is “heavily affected” by Europe’s governmental debt crisis. She said that “every country must contribute its share” to the expanded $596 billion fund to cover future bailout needs.

Slovakia, one of the poorest of the 17 nations that use the euro currency, late Tuesday rejected a $10 billion guarantee for the fund, toppling the center-right government of Prime Minister Iveta Radicova. Opposition lawmakers said Slovakia could not afford to support debt-ridden countries like Greece, where the average worker’s wage is higher than in the central European nation.

European Union President Herman Van Rompuy and European Commission President Jose Manuel Barroso called on the Slovak lawmakers to “rise above the positioning of short-term politics” and swiftly adopt the expanded fund, saying it was “in the interest of all euro countries, including the Slovak people.”

Legislative leaders in the country, the last of the eurozone nations to consider the expanded bailout, said they are working toward a new vote on Thursday.

While Slovakia reconsidered its vote, Barroso also declared that the continent’s banks needed to “significantly” boost their reserves to withstand possible losses they could incur on securities they have purchased from financially distressed governments.

He said the banks should not be allowed to pay bonuses to executives or dividends to investors until they have increased the reserves.

In Greece, civil servants staged a new wave of strikes against the government’s austerity measures, blocking access to the country’s finance ministry and shutting down the country’s museums and archaeological sites. More strikes are planned throughout October.

Greece has won preliminary approval to secure another segment of its $159 billion bailout from last year. But its financial condition continues to worsen. The government said Wednesday that its deficit for the first nine months of the year grew to more than $26 billion, a figure 15 percent higher than the same period a year ago.