26th Oct 2016

Merkel faces coalition troubles over euro-bailouts

Bavaria's conservative leader Horst Seehofer has threatened to withdraw support for German Chancellor Angela Merkel's coalition if more concessions are made to ailing euro-countries.

Seehofer, who chairs the Christian Social Union in Bavaria and is renowned for his polarising statements, told Stern magazine on Tuesday (3 July) that Germany's contribution to bailouts was already "borderline".

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"The time will come when the Bavarian government and the CSU can no longer say yes. And I wouldn't then be able to support that personally either," he said. "And the coalition has no majority without CSU's seats," the party chief added.

His biggest fear, he said, is that markets will soon turn to Germany and start asking if it can cope with all the rescues: "That is the point I regard as the most dangerous of all."

As for eurozone's troubled economies, the Bavarian politician advised them to drop their debt mentality.

"The fact that others want to get at our money without asking too much of themselves is deeply human. But it won't solve the problem."

He also vented anger at the deal sealed last week at an EU summit, where Merkel was seen as giving in to demands from Italy and Spain on changing the rules of the yet-to-be-created permanent bailout fund to help Rome and Madrid lower their borrowing costs.

"We were debating about the stability pact in the Bundestag. And at exactly that time the government leaders of some euro countries were working to soften precisely those stability criteria. Who is supposed to understand that?"

Referendum suggestions made by finance minister Wolfgang Schauble are also a no-go in Bavaria: "Hands off our constitution! We have this constitution to thank for the most stable state and the most stable democracy there has ever been in German history. We don't want a different constitution."

Merkel on Tuesday denied there were any divergences with the Bavarian sister party. "I think that we will cooperate well in the coalition, not only on European issues," she said during a press conference in Berlin.

The Free Democratic Party, Merkel's other coalition partner, sprang to her defence. "At the current difficult time for the euro and Europe, Germany needs a stable government which is capable of taking action," said FDP secretary general Patrick Doring.

"On rough seas, you don't question the course or the leadership," he told Handelsblatt.

But Bavaria's Conservatives are not alone in being disgruntled. Finland and the Netherlands in recent days have also re-stated their opposition to having the bailout fund buy bonds to help out Italy.

Meanwhile Slovak Prime Minister Robert Fico, while visiting Merkel in Berlin on Tuesday, said his nation was not ready to put more money in the euro-rescue with no guarantees for reforms.

"The (Slovak) public's patience is wearing thin," Fico said.

Merkel is travelling to Rome on Wednesday to meet Prime Minister Mario Monti.

"We will try to overcome opposition from countries like Finland and the Netherlands, which have a certain intolerance towards stability mechanisms," Monti said on the eve of the talks.

Spain's Socialists ease Rajoy's path to power

The Socialists agree to abstain in a confidence vote later this week, meaning conservative leader Mariano Rajoy should be able to form a minority government after 10 months of deadlock.

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