Wednesday

12th Aug 2020

German and Dutch MPs to clear way for Greek bailout

  • Bundestag metro stop: German rebellion to be smaller than predicted (Photo: Alexander Rentsch)

German and Dutch MPs are deciding on Wednesday (19 August) on the Greek bailout, after Austria, Estonia, and Spain said Yes on Tuesday.

The German debate, which began at 9am local time, will see finance minister Wolfgang Schaeuble, but not chancellor Angela Merkel, address the Bundestag on the €86 billion rescue package.

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  • Rutte had promised not to loan Greece any more money (Photo: Minister-president Rutte)

The deal is set to pass, according to a test ballot carried out late on Tuesday, in which just 60 deputies from Merkel’s centre-right coalition voted No.

The number of rebels is far fewer than the 120 predicted by German tabloid Bild and fewer than the 65 who voted No to the deal during talks in July.

Merkel also has the backing of the centre-left SPD and Green parties, making the Yes vote safe.

The optimism comes despite ongoing concern on whether the International Monetary Fund (IMF) will join the bailout.

Merkel has said it will, despite the fact the IMF’s precondition - a write-down of Greek debt - is to be met in part only, with longer maturity periods and lower interest rates for its loan-mountain.

The positive feeling was reflected by US ratings agency Fitch, which lifted its Greek grade one notch from CCC to CC on the eve of the German decision.

It said in a note it will lift the grade again if there’s a “track record of successful implementation of the … programme, brought about by an improved working relationship between Greece and its official creditors and a relatively stable political environment”.

Netherlands

Dutch lawmakers have also been recalled from their break for a plenary debate to start at noon local time on Wednesday.

The PM, Mark Rutte, had pledged in his election campaign that he won’t loan “one cent more” to Athens. But he warned, already in July, that he will break his promise.

His coalition controls 76 out of the 150 seats in the assembly, and his finance minister, Jeroen Dijsselbloem, who will address the house, commands authority as the chair of the Eurogroup which put together the Greek package.

The Freedom Party of Geert Wilders, a eurosceptic, says it will call for a vote of No confidence in Rutte. But with just 12 seats in the house, Wilders' motion is likely to fail.

Meanwhile, on Tuesday evening, the Austrian, Estonian, and Spanish governments secured national backing for the measures.

In Vienna, the deal was approved by a parliamentary sub-committee on the European Stability Mechanism (ESM), the EU’s Luxembourg-based crisis fund, which is to loan the money to Athens.

The Estonian assembly passed the bailout by 50 votes against 37.

Martin Helme, an MP from the opposition EKRE party, said: “The only thing that would help Greece now is to exclude it from the eurozone and to restructure, that is, to partially write off, its debt”.

Sven Sester, the finance minister said the bailout will “restore the capacity of Greek public finances, enable it to restore economic growth, employment, [and] investments”.

Spanish MPs voted Yes by 297 to 29.

"There are three lessons to learn from the Greek crisis: First of all, we can't get around the obstacle [of reforms]. Secondly, populist siren songs only end in mirages. Finally … irresponsible policies have a price”, economy minister Luis de Guindos said.

Earlier approvals

For their part, the Latvian parliament’s EU affairs committee and the Lithuanian cabinet backed the bailout on Monday.

Finland backed it last week. France did it in July.

Lawmakers in the other eurozone states - Belgium, Cyprus, Ireland, Italy, Malta, Portugal, Slovakia, and Slovenia - don’t need to ratify the plan.

Assuming the Dutch and German votes go as planned, the ESM board will meet on Wednesday evening to agree to the payment of Greece’s first tranche on Thursday morning.

The €26 billion payment breaks down as €13 billion in budgetary assistance, which will enable Athens to repay a European Central Bank loan due the same day, a €10 billion bank-buffer fund, and €3 billion more of loans in September.

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