Tuesday

5th Dec 2023

Germany to set up MP group to fast-track euro decisions

  • The full Bundestag still has to approve the extension of the eurozone's bail-out fund (Photo: BriYYZ)

The German government plans to set up a special committee in the Bundestag to fast-track euro-related decisions, as the legislature will be given a veto right on every future bail-out following a ruling by the country's constitutional court.

The draft bill, finalised on Tuesday (20 September), is aimed at securing a majority of MPs in a key vote on 29 September authorising the eurozone's bail-out fund, the European Financial Stability Fund, to buy state bonds and to pre-emptively inject cash in troubled countries.

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Constitutional judges in Karlsruhe earlier this month had ruled that neither the government nor institutions such as the EFSF may commit money without approval from a committee of the Bundestag.

Under the legislative proposal, a new sub-committee of the parliament's budgetary group will be empowered to give its assent in situations where extreme speed is required.

The number of MPs in this committee will be "able to take the necessary decisions quickly and confidentially" and should be kept "as small as possible," the draft reads, according to AFP. All parties, including the opposition, will be represented however.

The special committee will rule on 'urgent' matters such as stand-by loans, bank recapitalisation and bonds purchases on the markets.

Big decisions, such as the approval of a fresh bail-out for a eurozone country, would require the consent of the entire Bundestag. If the legislature vetoes it, the German representative to the EFSF will have to vote "No" and thus block the release of fresh financial aid. The draft specifically forbids the German representative to abstain in votes in the EFSF board, Reuters reports.

The bill also increases the German participation in the EFSF, with loan guarantees corresponding to €211 billion, up from the current €123 billion.

Despite a threatened rebellion from coalition backbenchers, Chancellor Angela Merkel is likely to see the bill pass through on 29 September, as the Social-Democratic and Green opposition parties have indicated they would vote in favour of the EFSF reform.

"We have a majority of 80 percent in the Bundestag," finance minister Wolfgang Schauble told the Berliner Zeitung.

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