A resounding majority in the German Bundestag on Thursday in favour of beefing up a €440bn eurozone rescue fund should be seen as a powerful signal to the financial markets, a leading German politician said.
“A huge majority is a very strong signal to Europe, the financial markets, and America, that Germany is ready to resume its responsibility” in the eurozone crisis, said Peter Altmaier, chief whip of the Christian Democratic Union, lead party in Germany’s ruling centre-right coalition.
Yet the eagerly awaited vote – by 523 votes to 85, with three abstentions – was greeted in Berlin government circles with a more sober mixture of relief and realism. For the manner in which the vote was won, and the narrowness with which Angela Merkel, the chancellor, managed to retain her absolute majority in the face of a rebellion by some of her own backbenchers, suggested that the government could face strong resistance to more crisis measures.
Any hopes in Brussels, and in the markets, for bold new initiatives to cope with the crisis are likely to face German resistance.
José Manuel Barroso, the European commission president, suggested, in a speech to the European parliament on Wednesday, that he had several new initiatives in the works – to address the immediate crisis and prevent a recurrence.
Mr Barroso said he would deliver proposals within weeks to co-ordinate economic integration in the eurozone, and also outline options for a common Eurobond – a step, he acknowledged, that might require the renegotiating of EU treaties.
Tough decisions are looming much sooner on how to keep the Greek government afloat without a debt restructuring, and how to prevent contagion through the eurozone from any possible Greek default, and the German government has made clear that further taxpayers’ money – beyond the current package – will not be forthcoming.
A big majority in the Bundestag was certain ever since the two main opposition parties, the Social Democrats and the Greens, promised to support the package. But it was still a stormy and tense debate, compared with most predictable events in the parliament, as the opposition charged Ms Merkel and her government with aggravating the crisis, and encouraging euroscepticism amongst German voters, because of its hesitation and indecision.
Peer Steinbrück, former finance minister and a potential SPD candidate to challenge Ms Merkel for the chancellery at the next elections, warned that a Greek debt rescheduling was inevitable, and a much larger aid package to revive the Greek economy and keep the country inside the eurozone.
Jürgen Trittin, co-leader of the Greens in the parliament, said Germany had “never been as isolated as today in the European Union”. And Carsten Schneider, budget spokesman for the SPD, declared it was only a matter of time before Ms Merkel’s coalition collapsed because of its internal contradictions.
Yet in the end, only 15 government supporters rebelled against the legislation which would increase Germany’s guarantees to the European financial stability facility, and give the fund new powers to buy bonds, make liquidity loans and help recapitalise weak banks. That was four short of Ms Merkel’s absolute majority, so she could claim to have kept her coalition together, and won without relying on opposition support.
The key to containing the rebellion was a major government concession to the Bundestag, giving the parliamentarians effective veto power over any future expansion of the EFSF, or any new programme for a eurozone country in difficulties. Even operational decisions by the EFSF to use its new powers will have to be given a green light by the budget committee.
The official response from the finance ministry was that the new rules on parliamentary oversight would be manageable – the same word used by Klaus Regling, head of the EFSF, when he gave evidence to the budget committee. But they will certainly not make crisis management any easier.
Wolfgang Schäuble, finance minister, promised flatly that there was no question of providing more German guarantees to increase the size of the rescue fund any further, and nor would there be plans to leverage the fund, if it meant more exposure for German taxpayers. “It is not under discussion,” he said.
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