Wednesday

24th May 2017

German opposition may delay vote on Greek aid

  • Bundestag: 'We need more time to study the deal,' says Steinmeier (Photo: BriYYZ)

A vote in the Bundestag on the recently agreed Greece deal may be delayed or split as the German Social Democrats (SPD) and Greens are asking for more time to study the implications of the package.

The centre-right coalition had scheduled the vote for Thursday (29 November) with the leftist-green opposition initially signalling it would be in favour of keeping Greece afloat.

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However, SPD leader Frank-Walter Steinmeier said the Bundestag is no "rubberstamping parliament" and the Thursday deadline is too short as not all documents have been translated into German.

Steinmeier also suggested the Bundestag to vote only on one measure - the bond-buyback scheme aimed at helping Greece lower the value of the outstanding bonds in private hands to 35 cents per euro. "We don't know yet if the bond-buyback will work," Steinmeier said.

The rest of the measures - lowering the interest rate on the Greek loans and handing over the profits from these loans - should then be approved by the Bundestag only mid-December, the Social-Democrat leader said.

According to estimates made by finance minister Wolfgang Schaeuble, the German budget for next year would lose €730 million in revenues from these two measures. The Bundestag must approve the measures first.

Schaeuble will meet MPs in the budget committee on Wednesday in a bid to convince them to stick to the planned schedule and vote for the whole package on Thursday or Friday.

Schaeuble is also under fire for not completely ruling out a debt restructuring, a measure demanded by the International Monetary Fund. Part of the long-fought compromise on Monday night was for Germany to agree that governments may take losses on their Greek bonds "once Greece returns or is about to return to a budget surplus." This, according to projections made by the troika, will happen sometime in 2016.

To the German opposition, however, it is "absolutely clear" that the debt restructuring debate is being put off until after Germany's general elections in September-October 2013.

Admitting that the Greek programme is costing German taxpayer money would be a blow to Chancellor Angela Merkel's centre-right coalition, after years of reassurances that this will never happen.

But even to some politicians in Merkel's Christian-Democratic Union, the prospect of losses on the Greek loans is unavoidable.

"I am afraid in the long run it will not work without debt restructuring," CDU man Wolfgang Bosbach told Bild.

Greece's debt has currently ballooned to 190 percent of GDP and is supposed to shrink to 124 percent of GDP by 2020 and around 110 percent by 2022, a task economists deem impossible without creditors taking a loss.

Opinion

Divided Europe, divided Eurozone

In the past few days, Brussels has been swept by a EU budget debate for the years 2014 to 2020, and the continuing saga of the Greek debt. Current solutions reflect old challenges and new divisions, writes Dan Steinbock.

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Portugal to sail out of troubled waters after eight years of financial crisis, EU commission predicted, amid broad but "fragile" recovery in European economy.

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