Slovak lawmakers are regrouping Wednesday to broker a deal that would remove the remaining obstacle to enhancing the euro-zone's government bailout fund, a key step in Europe's rush to erect new defenses against a spreading debt crisis.
Slovakia's government collapsed late Tuesday after a divided parliament voted against endorsing changes to the European Financial Stability Facility. A vote of confidence had been linked to the EFSF vote, which leaves Slovakia as the last hold out among the 17 euro-zone countries.
The new EFSF is to receive wider powers and see its lending capacity rise to €440 billion ($600.12 billion) from around €250 billion. Along with the planned recapitalization of European banks and a second bailout package for Greece, the bailout fund is central to Europe's efforts to prevent the debt crunch from spreading and developing into a banking crisis.
The focus now remains on Slovakia's capital, where there are strong signs that the EFSF will receive approval in a second vote that is to follow a series of political tradeoffs.
The outgoing cabinet of Prime Minister Iveta Radicova is expected to stay as a caretaker government until President Ivan Gasparovic decides to either appoint an interim cabinet or asks the outgoing government to run the country until elections take place. The current cabinet's term was to expire in mid-2014.
Talks between Slovakia's coalition government parties and opposition are set to start Wednesday and could result in a deal later in the day, a spokesman for the leading pro-bailout party said Wednesday. "Ideally we'd like to hold the [repeat] vote Thursday," Michal Lukac, the spokesman of Slovak Christian Democratic Union, or SDKU-DS, said.
Prime Minister Radicova failed to sway rebels in her four-party coalition to back the bailout fund and will have to strike an alliance with members of the opposition to secure approval at a fresh vote that could be held as early as Thursday.
Robert Fico, head of the left-of-center Smer-Social Democracy party, will represent the main opposition party in the talks, and is likely to push for new elections as the price for supporting the government parties behind the EFSF bill.
"Agreeing on early elections is the only legitimate way out of this stalemate," Jan Pociatek, a senior member of the opposition Smer party, said. "Depending on our talks with coalition the [repeat] EFSF vote may take place later this week."
On Tuesday, only 55 lawmakers voted to approve the EFSF changes, while nine lawmakers voted against the plan and expressed their lack of confidence in the cabinet. There were 124 lawmakers from the 150-strong assembly present during the vote. Sixty lawmakers, mostly from the left-of-center Smer-Social Democracy party, abstained from the vote.
Smer, which otherwise supports the EFSF and other bailout initiatives, wants concessions from the government in exchange for its support for the fund in the repeat vote. These concessions include a firm timeline for holding snap elections before the current parliament term expires.
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