AppId is over the quota
By Michael Winfrey and Petra Kovacova
POPRAD, Slovakia, Oct. 9 (Reuters) - The Volkswagen, Peugeot and Kia car plants along the main highway illustrate Slovakia's transformation from ex-communist backwater to euro zone success, the world's top auto maker per capita. They also explain its dilemma over Greece.
No strangers to privations and harsh economic reform, Slovaks are divided over whether their government should agree to increasing the powers of the fund set up to help Greece and other euro zone countries that have lived beyond their means.
So laborious is EU decision-making, that one dissenting voice among the 17 countries that use the euro could wreck the latest plan. It's a debate the rest of the world is following with concern.
Should Slovakia, the single currency's second poorest member, pay for countries like Greece, which borrowed too much, fudged data and spurned the thorough economic reforms that Slovaks endured to join the euro in 2009?
"The Greeks have big pensions and retire early. I'll have to work until I'm 65 to help pay off the loans that our government will have to take out to pay for Greece's mistakes," said Dana Antasova, a 31-year-old economist on maternity leave in the north Slovak city Poprad.
"I'm really mad. They stole everything, and now they want money from us?"
The reason for resentment is clear. Salaries in the country of 5.4 million average only 780 euros a month -- just a tad over a minimum wage of 750 euros a month in Greece -- and mothers like Antasova live off of a subsidy of just 11 euros a day.
Polls show Slovaks are split evenly over whether Prime Minister Iveta Radicova's government should ratify the expansion of the European Financial Stability Facility, the euro zone's bailout fund for countries in crisis.
A rebel party in the ruling coalition, the liberal Freedom and Solidarity (SaS), is threatening to vote against on Oct. 11.
But while many people agree with SaS and say Greece should be allowed to go bankrupt, they are also worried that a Slovak "no" could prompt another global recession and threaten an economy that is mainly driven by exports to euro zone partners.
WORKERS, EMPLOYERS, UNITE!
Slovakia's main highway is lined by factories owned by three big car makers and scores of other firms that flooded into the country after 1998 when reformists ousted the authoritarian government that held sway after communism.
The auto plants produced almost 700,000 cars in 2008 just before the global financial crisis hit, making Slovakia the world's biggest producer of vehicles per capita.
Samsung and Foxconn also produce flat screen monitors and other electronics, a Whirlpool site cranks out white goods in the foothills of the Tatra mountains, and thousands of workers sweat in the forges of U.S. Steel in the city of Kosice.
But those industries took a major hit two years ago, the same year Slovaks adopted the euro, when falling demand in the currency bloc caused a 9-month spell of double digit drops in industry and pushed unemployment to a five-year high of 13 percent.
Now, in a rare moment of harmony, workers and industrialists have joined forces to scold their politicians for holding up the EFSF expansion, fearing that a delay could cause another painful downturn.
"Even though it is difficult and Slovakia is not in a good social situation, (the EFSF) is necessary," Emil Machyna, head of the 200,000 strong industry, transport and services union OZ KOVO, told Reuters.
"We need to stand in solidarity within the euro zone, save what can be saved and to not have a further impact on employment, a fall in production, or a new recession."
To prepare itself for joining the European Union, which it joined in 2004, and the euro, Slovakia slashed public spending, introduced a flat 19 percent tax, and sold off dozens of state-owned companies.
The measures were painful. A cut to long-term unemployment benefits caused riots in the country's largely impoverished Roma community in 2004, and unions are now planning a strike this week due to low salaries.
But many say the pain was worth it. Slovakia led the EU in growth by expanding 10.5 percent in 2007, and purchasing power has risen half to 74 percent of the EU average since 2000, a trend businesses say is largely due to euro membership.
"The fact that we are exporting cars into the rest of Europe, the stability of the European economy is of the utmost importance," said Dusan Dvorak, a spokesman for Kia autos in Slovakia.
Radicova, who has said she had a personal commitment to ratifying the EFSF, put it more bluntly: "If we reject the EFSF, we can forget about economic growth."
PAYING THE PRICE
SaS leader Richard Sulik and his coalition partners argued their way out of contributing to a first Greek rescue package but now his party is the only one blocking the new measures. With 21 of the coalition's 77 votes, it can prevent a majority in the 150 seat parliament.
Now he complains that average paid Slovaks will have to work twice as hard as their German counterparts - 300 hours versus 120 for Germans - to pay for their part of their countries' contributions to the EFSF.
"We will pay the highest price in the euro zone," he told television TA3 on Sunday.
Without Slovak ratification, the fund's new powers can't go live. A political source said the ruling coalition's other three parties would push through the EFSF's expansion with opposition support if next Tuesday's vote fails, even if it leads to the collapse of the government or early elections.
Employers are losing their patience.
"We appeal to all political parties that are fundamentally rejecting a joint and coordinated approach in the euro zone to realise that their stance is very bad and one that Slovakia cannot afford to take," said Klub 500, an association of 500 businesses that employ more than 80,000 workers.
"BELLYBUTTON OF THE WORLD"
Slovakia still trails countries like Greece, where purchasing power is 89 percent of the bloc's. People like Marta Brnova worry that failure to pass the EFSF could end the game of catch up.
"It would hit us for sure," said Brnova, a 26-year-old receptionist for Johnson Controls, a company that is part of the huge car industry supply chain. "And after all this work, we don't want some other country to overtake us."
There is also the issue of pride. In Bratislava, people rejoiced two years ago when their crown currency vanished and their bank machines started spitting out the same euros they could get half an hour away in Vienna.
It was a small victory for a nation that trailed its larger former federation partner, the Czech Republic, in terms of economic performance and international image after the two split in the so-called "Velvet Divorce" in 1993.
After a decade of playing troublemaker on the European Union's eastern frontier in the 1990's under xenophobic and diplomatically isolated former Prime Minister Vladimir Meciar, many Slovaks cringe at the idea of rocking the euro zone boat.
"Generally, we condemn the populism that some political parties are engaging in," said Miroslav Gazdik, head of KOZ, the umbrella group that represents all union members in Slovakia's 2 million strong workforce.
"I think that, as a small country, we can't behave like the bellybutton of the world. If we want to exist in the community and use certain benefits we have contribute with something to the club."
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