German vote won, but is Merkel hungry for more?

Germany will shoulder up to €211 billion of the fund's €440 billion worth of guarantees, but critics fear it is already clear this will not be enough and taxpayers will be asked for more.

hidden September 29, 2011 18:03:05 IST
German vote won, but is Merkel hungry for more?

Berlin: The euro zone's crisis package may have got a new life with today's German Parliament backing. But for Chancellor Angela Merkel, the worries are not going to go away anytime soon. She may have cleared the first hurdle, but it's still not clear if she has enough clout to convince rebels about the utility of the rescue mechanism for Greece over the long term.

Support from the opposition meant there had been no doubt Germany would okay new powers for the European Financial Stability Facility (EFSF), which some countries like Finland have ratified but others, including Slovakia, are disputing. The Bundestag's (lower house of Parliament) deputy speaker Wolfgang Thierse said 523 lawmakers had voted for the bill, 85 against with only three had abstentions.

German vote won but is Merkel hungry for more

German Chancellor Angela Merkel prepares to vote at the session of the Bundestag lower house of parliament in Berlin, on Thursday. Reuters

If a breakdown of votes expected take up to an hour more shows the bill only got through thanks to the centre-left opposition, it would undermine the conservative chancellor's ability to pilot fresh measures to combat the euro crisis. Merkel had tried to assure her coalition that taxpayers' money would not be wasted by supporting bailout measures — but she could not rule out that the money might be written off if, as financial markets increasingly fear, Greece defaults.

Germany will shoulder up to €211 billion of the fund's €440 billion worth of guarantees, but critics fear it is already clear this will not be enough and taxpayers will be asked for more.

That impression was reinforced by talk at the International Monetary Fund last weekend of the need to beef up the EFSF even more — on top of the extra powers decided by European leaders in July — by leveraging its capital and bring forward the permanent scheme supposed to replace it in mid-2013.

Finance Minister Wolfgang Schaeuble told the Bundestag (lower house of parliament) in a fiery debate before the vote it was "indecent" to speculate at this point about Germany being asked to contribute more to the EFSF. "We're borrowing money from our children to put in a showcase and it is money that we don't have," said one rebel in Merkel's Christian Democratic Union (CDU), Klaus-Peter Willsch.

Rescue the euro of the FDP

Merkel is often accused in Europe and at home of dithering on the euro crisis and if she did not win the EFSF vote on her own terms, it would damage her hopes of taking the conservative bloc she has led for 11 years into the next elections in 2013.

International auditors return to Athens on Thursday to deliver their verdict on whether Greece's tougher austerity measures qualify for further aid.

The chancellor has told Greece she wants to wait for the results of an audit by the "troika" of the European Union, European Central Bank and IMF to see whether its findings "tell us we will have to renegotiate or not".

Such talk by Merkel and other German officials may refer to raising the level of private creditor involvement in the Greek bailout, by getting them to accept bigger potential losses — or "haircuts" — on their Greek sovereign bond investments. Senior coalition figures like Economy Minister Philipp Roesler, head of Merkel's Free Democrat (FDP) partners, have already said an "orderly" Greek default should not be taboo.

With a core of naysayers in the CDU, its Bavarian allies the CSU and the FDP, the vote was being scrutinised to see how close Merkel got to a convincing 311 'yes' votes from her own bloc in the 620-seat Bundestag.

If there are more than 19 rebels, Merkel will have passed the EFSF thanks to the centre-left opposition and may have to rethink how to address growing discontent among her supporters and the population at large about the euro zone debt crisis.

Sentiment remains divided. Even though labour unions called on MPs to back the measure, the conservatives' "Mittelstand" small business alliance had urged MPs to vote 'no'.

The opposition Social Democrats (SPD) and Greens have won a run of state elections this year and, with two more votes in coming months on the second Greek bailout and a permanent mechanism to succeed the EFSF, portray themselves as defenders of the single currency.

With the FDP's popularity sliding to just 2 percent in some recent polls and state elections, and the party increasingly critical of euro zone bailouts, it often appears more of a liability than an asset for Merkel. "In the end, the chancellor will have to decide: either she wants to rescue the euro or the FDP," said former SPD foreign minister Frank-Walter Steinmeier of the SPD to Bild newspaper.

Reuters

Updated Date:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

Greek court imprisons far-right Golden Dawn party leadership for running criminal enterprise
World

Greek court imprisons far-right Golden Dawn party leadership for running criminal enterprise

The court granted suspended sentences to five of the party's 18 former lawmakers who were convicted of lesser charges

Greek court sentences leadership of far-right Golden Dawn to 13 years in prison for running criminal enterprise
World

Greek court sentences leadership of far-right Golden Dawn to 13 years in prison for running criminal enterprise

The landmark ruling follows a five-year trial of dozens of top officials, members and supporters of Golden Dawn, which was founded as a neo-Nazi group in the 1980s

Two AMU doctors, who commented on Hathras case, removed; authorities say move purely procedural
India

Two AMU doctors, who commented on Hathras case, removed; authorities say move purely procedural

The order ending the contract of the two doctors -- Dr Mohamnad Azeemudin and Dr Obaid Imtiaz -- was issued by Chief Medical Officer SA Zaidi on Tuesday, a day after the CBI team probing the gang rape and death case visited the hospital