Malta down, one to go

There is just one hurdle left in the process of gaining approval for new powers to rescue the euro. After Malta gave its approval on Monday evening, only Slovakia has yet to approve the scheme.

The Maltese parliament voted unanimously to approve the new powers for the European Financial Stability Facility (EFSF) after two marathon sessions and a week's delay over a legal objection.

The lawmakers of Europe's smallest country voted in favor of increasing the EFSF's lending capacity to 440 billion euros ($600 billion) to which Malta will contribute 704 million euros.

"This shows Malta's commitment towards European financial security," Finance Minister Tonio Fenech told the German news agency dpa after the vote.

Under the new rules agreed to by eurozone leaders this summer, the fund will be allowed to buy states' debt and recapitalize banks facing solvency troubles. The changes must be approved unanimously by the legislatures of all eurozone states, however, an example of how difficult policymaking can be across the 17-member currency union.

Slovakia votes

Now that Malta has voted, all eyes turn to Slovakia, where divisions among the governing coalition have threatened to derail the fund expansion.

The four parties that make up Slovakia's center-right coalition failed to come to an agreement Monday on expanding the eurozone's bailout fund. Slovak Prime Minister Iveta Radicova said last-ditch negotiations will continue on Tuesday morning, ahead of a crucial vote later in the day.

Radicova has decided to tie the ratification of the EFSF to a vote of confidence in a bid to force the Freedom and Solidarity Party (SaS), a coalition partner, to approve the mechanism.

The SaS has repeatedly threatened to block the legislation, and party chief Richard Sulik has warned that the SaS will not vote in favor of the fund "if the situation stays the same." He proposed an alternative deal to his coalition partners, but it was rejected on the weekend.

Stumping up the cash

Sulik says Slovakia should be exempt from making a contribution of 7.7 billion euros ($10.2 billion) to the 440-million euro EFSF, because the Slovak people are too poor to pay for the mistakes of others.

Sulik is also demanding an opt-out from the permanent bailout fund, the European Stabilization Mechanism (ESM), designed to replace the EFSF in mid-2013, and for Slovakia to have veto power over any future emergency loan handouts.

Radicova, whose coalition government holds 79 seats in the 150-member parliament, is dependent on the SaS's 22 votes to secure a majority. Failing that she may have to rely on opposition support.

But the leader of the opposition, former prime minister Robert Fico, says his party will only back the plans if there is a power shift in the coalition government, or a snap election.

EU President Herman Van Rompuy announced Monday that the bloc was delaying a key summit on the eurozone rescue package by almost a week to give leaders more time to finalize a response to the debt crisis. The summit will now take place on October 23.

Author: Joanna Impey, David Levitz, Holly Fox (AFP, AP, Reuters)
Editor: Michael Lawton