(Repeating story from Thursday)
* Slovaks sign EFSF framework, clear hurdle for activation
* Cabinet rejects Slovak 800 mln euro loan to Greece
* European Commission welcomes Slovak decision
(Adds signing, European Commission comment)
By Martin Santa
BRATISLAVA, July 15 (Reuters) - Slovakia cleared the way on
Thursday to the launch of a European safety net for governments
that end up in a debt trap, yielding to pressure from European
partners to put aside opposition to the plan.
The euro zone's poorest member, led by the new centre-right
cabinet of Prime Minister Iveta Radicova, had been holding up
the 750-billion euro European Financial Stability Facility
(EFSF) after objections to bailouts became a campaign issue in
Slovakia's June election.
But the government approved the plan on Thursday and Finance
Minister Ivan Miklos promptly signed a framework agreement on
the fund, removing the last big obstacle in its way.
The European Commission welcomed Bratislava's decision and
added that dialogue with Slovakia would continue.
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The previous leftist government of Robert Fico, which
stepped down last Thursday, had endorsed the aid mechanism. But
any financial assistance to richer EU states is deeply unpopular
in Slovakia, a euro zone member only since January 2009.
"We want to set an example of following the rules of the
game. Because of this, the government has supported the
political declaration given by the previous government in May,"
Radicova told reporters to explain what swayed the cabinet.
Pressure on Bratislava to unblock the EFSF rose in past
weeks since the fund is a crucial part of the 27-member European
bloc's efforts to restore confidence in financial markets after
the Greek debt crisis.
The Slovak cabinet recommended parliament support the safety
net scheme but also agreed it would demand creation of stricter
fiscal rules in the euro zone, including a mechanism for
bankruptcy for countries with irresponsible fiscal policies,
before any aid from the fund is released.
Temporary financial support to troubled countries will have
to be in line with the International Monetary Fund's policies
and conditions, the government said.
Miklos, a fiscal hawk charged with slashing Slovakia's
burdensome fiscal deficit, introducing further market reforms
and reinvigorating the domestic economy, said he expected the
parliament to debate the Slovak role in EFSF in coming weeks.
Slovakia's share in the overall 750 billion euro ($961
billion) plan is 4.5 billion euros worth of guarantees.
The country of 5.4 million adopted the single currency only
in January last year and its public is angry that they have been
asked to help bail out Greece, a much better off country.
GREEK LOAN HITS A SNAG
Consequently, Radicova's cabinet did not budge on a separate
promise made to voters that it would not back aid for debt-laden
Athens, agreed by European countries separately from the EFSF.
The cabinet recommended that parliament not approve an 800
million euro ($1.02 billion) bilateral loan to Greece, which
would be the Slovak contribution to the 110 billion euro EU
bail-out package.
"The Greek loan is about irresponsible government policies,
irresponsible behaviour of the banking sector, rating agencies,
but also of the Eurostat and malfunctioning of other
institutions," Radicova said.
"I'm against the loan, we are the euro zone's poorest
country and this is ridiculous. Greece had been living above its
means," said Silvia Habova, 27, an account manager.
The minimum wage in Slovakia, a former communist country, is
308 euros, well below the Greek minimum legal wage of 863 euros.
(Reporting by Martin Santa; Editing by Mark Heinrich)
