Monday

4th Jul 2022

Merkel coalition easily passes EU rescue-fund vote

  • A night of arm-twisting of rebels assured the passage of the draft law (Photo: consilium.europa.eu)

In a major domestic victory German Chancellor Angela Merkel, the Bundestag - the country’s lower house of parliament - has robustly backed a strengthening of the eurozone’s multi-billion euro rescue fund.

With Merkel’s free-market-liberal coalition allies in the Free Democrats increasingly taking a critical line on Europe and its series of bail-outs for peripheral states, fears were widespread ahead of the vote that the chancellor might not be able to win enough votes within her own coalition to push through the changes to the European Financial Stability Fund without the indignity of having to rely on the opposition Social Democrats and Greens.

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However, after heavy late-night arm-twisting of rebels, the legislation was approved 523 to 85, with three abstentions. A full 315 members of the governing coalition voted in favour, four more than the 311 needed to win without depending on help from the centre-left.

Just 15 members of the coalition voted against the government.

The FDP is battling a massive plunge in popular support, with some polls putting the party on just two percent - far beneath the five percent required to enter parliament. If an election were to be held today, it is likely that the party would be wiped out.

Many in the party argue that Germany has already contributed more than enough to European rescues of peripheral countries and that Greece in particular should be left to deal with its alleged profligate ways on its own.

Die Linke, the left-wing party, made up the bulk of the 85 dissenters. The group, like many in the FDP, is opposed to the EU-IMF bail-out packages, but for very different reasons, arguing that the rescues are not of peripheral states, but of banks of the core EU countries and that the austerity that comes attached to the rescues hits ordinary people.

The chancellor can now breathe a sigh of relief for her own position. A reliance on opposition votes would likely have spelt the end of the governing coalition.

“Today we will make an important contribution to our nation, to Europe and to the stability of the euro,” coalition parliamentary leader Volker Kauder said after the vote.

The approval gives the green light from Europe’s biggest economy for the EFSF to purchase government bonds in secondary markets and to participate in bank recapitalisation actions.

The changes to the rescue fund also crucially hike Germany’s contribution to €211 billion, up from €123 billion.

Coalition members were also worried that even as the latest expansion of the EFSF, European officials were quietly at work on a still larger rescue operation amounting to as much as €2 trillion.

EU officials and core-nation domestic sources have confirmed that various options on a leveraging of the EFSF are under consideration.

German finance minister Wolfgang Schaeuble lashed out at suggestions that such a plan was underway.

“Nothing is being kept secret or being kept quiet,” he said during the debate in the Bundestag.

He emphasised that today’s vote is only about the new sums and the new powers of the EFSF and nothing else.

“So every suspicion and every uncertainty is indecent and inappropriate,” he said.

However, the minister appeared to leave the door open to adjustments to the bail-out fund, saying: “The guidelines on the enlarged EFSF have not been finally negotiated.”

He continued that the parliament would have to approve these ‘guidelines’ indicating that this will allow MPs to see what “framework” is being negotiated.

The changes to the EFSF must be approved by all 17 eurozone states. A total of nine so far have done so, including Finland on Wednesday.

Slovakia remains a potential hurdle, with one of the four coalition parties in the government, the libertarian Freedom and Solidarity party, having been steadfastly opposed to the bail-out mechanism.

However, late on Wednesday, the party’s parliamentary leader, Jozef Kollar, indicated to TV Markiza that the party is close to an agreement with the other parties on giving its assent.

Kollar said that the condition the party is attaching to its backing is that Slovakia would not have to contribute to the fund.

Prime Minister Iveta Radicova is pushing for a vote before the autumn EU summit, meaning 16 October at the latest.

EU hushes talk of multi-trillion bail-out ahead of German vote

European politicians were trying to avoid too much talk of a multi-trillion-euro revamp of the eurozone’s crisis strategy ahead of a crunch vote in the German parliament, with the German finance minister denying plans for such an increase.

Greek police protest troika, German and French embassies

The very people who have been charged with protecting the Greek parliament and politicians from furious crowds and who have even been criticised by Amnesty International for their heavy-handedness, the Greek police, have themselves now begun to protest EU-IMF austerity.

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

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.

German court: Parliament must not be sidelined in future bailouts

Germany's highest court on Wednesday approved the country's participation in the Greek bailout and eurozone rescue fund. But also that the German parliament must have more say when it comes to agreeing further bailout packages. Chancellor Merkel welcomed the ruling.

Green crime-fighting boss urgently required, key MEP says

The European Parliament approved last week a non-binding resolution on illegal logging, calling to extend the EU public prosecutor's mandate to also cover environmental crime. The lead MEP on the file has called for urgent implementation.

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