(Repeats story from late Wednesday)
* FinMin Miklos sees danger of euro area split
* Slovaks still see advantages in belonging to euro zone
* Backs call for private sector inclusion in bailouts
* Uncertainty extends selloff of periphery euro zone debt
By Martin Santa and Jana Mlcochova
BRATISLAVA/PRAGUE, Nov 24 (Reuters) - There is a very real
risk that the euro zone may break up or cease to function
properly under the weight of the debt crisis gnawing away at its
periphery, Slovakia's finance minister said on Wednesday.
Ivan Miklos spoke as policymakers in the currency area
discussed billions of euros of aid for debt-laden Ireland,
workers went on strike against austerity measures in Portugal
and politicians bickered over rules for smoother crisis response
in the future.
His comments mirrored a statement by German Chancellor
Angela Merkel who said on Tuesday that the euro was in an
"exceptionally serious" situation.
Miklos, a fiscal hawk in the centre-right Slovak cabinet,
spoke about the euro zone problems in the context of Estonia
joining the single currency in January.
"Even in the current conditions, which are very tough, very
complicated and when the risk of a euro zone break-up, or at
least its very problematic functioning, is very real, despite
all that, Estonia will become a new member in January," he said
in a debate at a university in Prague.
He added that euro zone membership was still favourable for
Slovakia, boosting its economic growth by about 1 percentage
point, but if Bratislava were to have to make the decision about
joining now, it would be a much tougher call.
Slovakia has been an outlier in the euro zone. It joined the
the single currency last year as its poorest member, but instead
of the desired safe haven after years of fiscal reforms it was
asked to cough up cash to rescue much richer Greece, which got
into trouble against a backdrop of fiscal profligacy and
accounting tricks.
Slovakia angered its euro zone partners by refusing to take
part in the Greek bailout, but it agreed to provide aid to
Ireland via the European Financial Stability Facility (EFSF),
since Dublin's troubles were caused the banking sector rather
than government spending. []
CLEAR RULES NEEDED TO PREVENT CONTAGION
Miklos rejected suggestions made by some EU member
politicians that Ireland should raise its low taxes as part of
any rescue deal and said he explained the Slovak position to
other EU finance ministers on Sunday.
The EU must create clear rules on debt restructuring and
private sector participation in bailouts to prevent more
contagion from the euro zone debt crisis, Miklos said earlier on
Wednesday.
The plan, together with a push by top euro zone economy
Germany for the private sector to share the risks of future
sovereign debt crises, has spooked investors and exacerbated a
sell-off of bonds from Ireland and other debt-laden countries in
the region.
"It is necessary to make clear rules about the participation
of the banking and financial sectors and debt restructuring to
prevent contagion," Miklos told reporters in Bratislava.
The selloff of peripheral euro zone bonds continued on
Wednesday, with yield spreads widening on Spanish and Portuguese
debt and the prices of insurance against sovereign debt default
rising to record highs. []
A German government paper seen by Reuters that Merkel's
government wants to put forward as a framework for discussions
at the EU level said private investors should face "haircuts",
or writedowns, in case of bailouts.
The new crisis mechanism would come into force in mid-2013,
after the current safety net expires.
(Writing by Michael Winfrey and Martin Santa; Editing by John
Stonestreet)
