August 30, 2011 10:42 pm

Merkel fights back over Greek bail-out

Angela Merkel is campaigning to win the toughest vote of her career – not the elections in her home state this weekend nor those in Berlin soon after, but a parliamentary vote on legal changes allowing more financial aid for Greece.

Scheduled for September 29, the vote is formally about changes to the eurozone rescue fund. Informally, however, it is a judgment on the entire Greek bail-out package.

While Germany’s chancellor and her top parliamentary lieutenants say they are confident of success, a fair number in her party have still to be convinced. Bundestag deputies talk of a nail-biting vote.

So Ms Merkel has taken her message on the road. Last week she was in her home state of Mecklenburg-Vorpommern, in north-east Germany, on the stump for party colleagues while also testing the political water on Greece.

In Stralsund, a pretty Baltic port at the heart of her constituency, Ms Merkel told a crowd that eurozone members who received help had to commit to budget cuts and structural reform. She promised to transform the eurozone from a “debt union” into a “stability union” and won applause for rejecting joint eurozone debt through the issue of eurobonds.

But enthusiasm for the other side of the deal – giving Greece more money – was tepid at best.

“Do we have to do it?” asked Liselotte Ulrich, a CDU member holidaying in Stralsund. “I used to be a fan of Merkel,” said the pensioner. “But there are things not going right. Europe is one of them.”

Oliver Märtin, a student at nearby Greifswald University, said the German government should think about helping the Greek economy become competitive, rather than giving them more money. “It’s all not great. But then again, what choice do we have?”

Since EU leaders agreed the €109bn package in late July, CDU members have been grappling with the issues – and complaining to their MPs. As one lawmaker said on his way to a meeting with Ms Merkel last week: “We are here to let off steam.”

For many parliamentarians, legal changes to allow the European financial stability facility to buy sovereign bonds on the market comes close to a “transfer union”, in which richer members subsidise poorer members of the bloc. They also want some parliamentary say over each future aid agreement to guard against EU leaders freely funnelling off taxpayers’ money.

Last week Wolfgang Bosbach became the first senior CDU MP to say he would not vote for the new rules. Klaus-Peter Willsch, long opposed to bail-outs, said 30-40 colleagues were “unhappy” – not counting the Free Democrats, the CDU’s junior partner. Together the two parties enjoy a slim 20-seat majority.

Mr Bosbach was followed by labour minister Ursula von der Leyen, who broke ranks by saying Greece should post collateral for the new loans. Meanwhile, federal president Christian Wulff said eurozone leaders seemed driven by the markets, and had no longer-term vision; former chancellor and Ms Merkel’s mentor Helmut Kohl said the government had “no idea” of where it was going “at home or abroad”.

With opposition Social Democrats and Greens pledged to helping Greece, parliamentary approval remains as good as certain. Less clear, however, is whether Ms Merkel would call an early election if she did not command her own majority.

In Stralsund, Sandro Segeth, a bank clerk who has never voted for Ms Merkel, said she seemed to be doing her best in a dire situation.

“It is extremely complicated and dramatic,” he said, because all the options for the CDU were unpalatable. “I think they’ll stick with Merkel – as the least worst.”

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