Tags: EU | Europe | Financial | Crisis

German Lawmakers Approve Euro Rescue Package

Friday, 21 May 2010 07:04 AM

 

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Germany's parliament on Friday approved a law allowing Europe's biggest economy to contribute to a 750 billion euro ($940 billion) emergency debt package despite wide public opposition to the move.

A clear majority of lawmakers in the Bundestag lower house backed the bill, but 10 members of Chancellor Angela Merkel's center-right coalition rebelled by either voting against or abstaining, highlighting the domestic pressure she is under.

The bill will allow Germany to contribute some 148 billion euros in guarantees to the international package.

Merkel has come under increasing fire for her leadership style during the euro zone debt crisis both from the opposition Social Democrats (SPD) and from within her own ranks.

On Friday, there were 319 votes in favor, 73 against and 195 abstentions. The SPD and Greens abstained and the socialist Left party voted against the bill.

The Bundesrat upper house later passed the bill, leaving President Horst Koehler to sign it into law.

Faced with public anger about bailing out weaker euro zone states, Merkel and Finance Minister Wolfgang Schaeuble have argued the package is crucial to defend the European common currency which, Merkel says, is in danger.

"We're doing this in our best national interests ... the common European currency has been a huge benefit to Germany," Schaeuble said in an impassioned speech before the vote.

"Almost two thirds of exports go to members of the euro zone. Without the euro, we would have a much weaker economy, a much weaker Germany," he said to loud applause from lawmakers.

Germany has a responsibility to keep the euro stable, the EU Stability and Growth Pact must be toughened and the roots of the euro zone crisis -- deficits -- have to be tackled, he said.

The overall package includes 440 billion euros in guarantees from euro states plus 60 billion euros in a European instrument and 250 billion euros from the IMF. It comes on top of a 22.4
billion euro contribution from Germany to an international rescue plan for debt-ridden Greece, approved just two weeks ago.

In a sign of the pressure Merkel is under, a survey for ZDF television showed that 51 percent of Germans polled opposed the euro zone aid package and 54 percent said Merkel was giving too little direction.

Voters in the state of North Rhine-Westphalia punished Merkel's centre-right coalition in a regional vote earlier this month that was overshadowed by a row over the debt crisis.

Germans resent forking out for weaker euro zone members. They fear a bulging deficit of their own and fail to see why they should help states that have been less rigorous in budget discipline than themselves.

In the parliamentary debate, SPD leader Sigmar Gabriel accused Merkel of losing all credibility, especially on the question of a financial transaction tax, which his party had made a condition of the SPD's support for the bill.

Addressing Merkel, he said: "You have no direction, you have no goal," adding that Merkel's tactics had lost the confidence of Europe.

In an even more stinging attack, Horst Seehofer, head of Bavaria's conservatives who share power with Merkel, told the Sueddeutsche Zeitung daily: "Sometimes I have to stop myself
from tearing my hair out," complaining of a lack of clarity over the government's plans on a financial transaction tax.

"The public feels mocked," he said.

Germany shocked markets and annoyed several EU partners this week with a unilateral ban on various speculative trades, a move widely seen as a response to domestic public pressure over
Germany's role as the EU's "Paymaster General."

Since then, France and Germany have sought to patch up their differences, with both on Thursday vowing to push for an international tax on banks.

© 2014 Thomson/Reuters. All rights reserved.

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