- The Washington Times - Wednesday, October 12, 2011


Countries around the world are inching ever closer to bankruptcy. The response from politicians has been the predictable call for yet more government intervention in the marketplace. So it’s worthy of note when a tiny nation is willing, if only temporarily, to take a stand against bailouts.

Richard Sulik, the leader of Slovakia’s minority Freedom and Solidarity Party, held his 21 deputies together as they abstained from voting on the legislation to ratify a boost in the European Financial Stability Fund (EFSF). Slovakian Prime Minister Iveta Radicova had linked expansion of the fund to $600 billion with a confidence vote. When the vote failed Tuesday, the Slovak government fell.

Expanding the bailout fund requires a unanimous vote from all 17 members of the European Union, and Slovakia is the holdout. Mr. Sulik correctly points out that expanding the EFSF means that poorer Slovaks would find themselves bailing out richer Greeks. The average Slovak, who has the lowest salary in the EU, would have to work an extra 300 hours a year to cover the country’s increased guarantees to the fund.

Not so long ago, Slovakia made the wrenching transition from a centrally planned economy to one based on markets. It sold state enterprises, cut entitlements and boosted tax revenues by enacting a 19 percent flat tax. These are the very policies that ought to be put in place in Greece to address the current crisis.

Instead, European leaders desperately hope to limit the financial contagion to Greece with a massive cash infusion, even though Greece has consistently failed to meet its targets for deficit reduction. The International Monetary Fund and the EU are doling out the cash anyway. The $600 billion obligation to the EFSF could grow in the future, as the EU admits that amount won’t be enough to protect larger countries.

Slovaks shouldn’t be on the hook for the failures of undisciplined countries. The Slovaks are just beginning to reap the benefits of their thrift, only to be stuck paying the bills for those who did everything wrong. Mr. Sulik is eloquent in his rejection of the idea that European banks need to be saved. “They took on too much risk,” he said. “That one might go broke as consequence of bad decisions is a just a part of the market economy.”

Unfortunately, Mr. Sulik’s principled stand won’t halt the march of folly for long. Ms. Radicova is determined to submit the matter to repeated votes until she gets the outcome she wants. The leftist party, Smer, has indicated it will back the expansion in the fund in a second vote. That’s bad news for not just the Slovaks, but also for taxpayers and the productive class across the European Union.

A debt crisis is not going to be solved by borrowing more money and engaging in a spending spree. Europe’s troubles in many ways mirror our own.

Nita Ghei is a contributing Opinion writer for The Washington Times.

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