Slovakia has set a bad example by refusing support for a loan to Greece, and the European Central Bank will not support euro entry by other countries unless it is sure they will not take similar steps in the future, ECB President Jean-Claude Trichet was quoted as saying.
A memo from this week’s meeting of eurozone finance ministers, leaked to the press, said that Trichet was outraged by Slovakia’s refusal to participate in the Greek bailout.
Several EU officials said privately that Slovakia could be snubbed by some of the 26 other EU member states because its decision is likely to complicate talks on the bloc’s budget, making the rich net payers less willing to grant aid to poorer countries.
“Trichet was outraged at the last Eurogroup by Slovakia’s refusal of a bilateral loan to Greece and said that had the ECB known Slovakia would behave like that, it would not have endorsed Slovakia’s euro adoption,” the memo summarising the discussion said.
“It sets a bad example for future candidate countries. Also [he said] the ECB would not back future eurozone applicants if there is a risk they would do something similar.”
Two eurozone sources confirmed that Trichet made the comments., with one saying: “That’s a fairly faithful account of what was said.”
Last month, the parliament in Slovakia, the poorest of the 16 countries that use the euro, ruled against contributing €816 million to a €110 billion bail-out fund for Greece
“Some European institutions voiced concerns about Slovakia’s stance on the Greek loan during the Eurogroup meeting. Since this was a meeting of a confidential nature, we will neither confirm nor decline individual comments,” said Slovak finance ministry spokesman Martin Jaros.
The ECB had no comment.
In its convergence reports, the ECB evaluates how well non-eurozone EU members fulfil euro entry criteria.
Apart from inflation, the euro entry criteria are: budget deficit below three per cent of GDP, gross public debt below 60 per cent/GDP, nominal long-term interest rates no more than two percentage points higher than the average of the three states with lowest inflation.
Bratislava said taxpayers in a country that has kept its debt under control should not have to bail out a profligate one.
Slovakia’s new right-leaning government opposed taking part in the bail-out, despite a pledge by the previous administration to support Greece, where the budget deficit had ballooned so much that it threatened the stability of the eurozone.
The aid package will go ahead despite the Slovak parliament’s refusal, but Bratislava’s position dealt a blow to eurozone unity in the face of the financial crisis and Slovakia has run into sharp criticism from European governments.
However, the Slovak position has been backed by the Czech Republic, a country that has taken a slow approach toward euro entry and currently has no target date.
A major issue in the Slovak refusal to help Greece is that Slovakia, which only joined the euro in 2009, is the eurozone’s poorest state and its wages and pensions are far below those in Greece, which makes aid to Athens widely unpopular.
The monthly minimum wage in the ex-communist country, which joined the EU in 2004, is €308, well below the Greek minimum legal wage of €863.