Merkel wins crucial vote on Greek bailout

Members of German parliament vote by a large majority to approve new powers for EU’s bailout fund.

German Chancellor Angela Merkel has won a major vote in the Bundestag after deputies approved new powers for the European Union’s bailout fund.

The vote in the lower house on expanding the $599bn bailout fund had been seen as a crucial test of Merkel’s authority amid fears of a major backbench rebellion.

Among the 611 deputies present, 523 approved the measure, 85 voted against it and three abstained.

Only 15 deputies from her centre-right coalition voted against the measure or abstained after threats of a major backbench rebellion which would have  delivered a stinging blow to her political authority.

Traders and European partners had been on tenterhooks before the vote as Germany, the eurozone paymaster, became the 11th country among the 17 using the euro to agree to boost the scope and size of the fund, called the EFSF.

Most European and US stock markets rose on Thursday in response to the Bundestag vote.

The Dow Jones Industrial Average was up 0.1 per cent to 11023.88 and Standard & Poor’s 500 index fell 0.6 per cent to 1143.85.

Frankfurt’s DAX 30 index rose 1.10 per cent at 5,639.58 points and in Paris, the Paris CA 40 advanced 1.07 per cent to 3,027.65 points.

In London the FTSE 100 fell 0.40 per cent to 5,196.84. Madrid won 0.90 per cent and Milan shot up 2.07 per cent.

The euro climbed from 1.3536 to to $1.3635 late in New York on Wednesday, while the dollar dipped from 76.53 yen to 76.49 yen on the same day.

Opposition support

Opening the lively, at times fraught debate on Thursday, Volker Kauder, who heads Merkel’s parliamentary group of conservatives, said it was a pivotal moment in the spiralling eurozone debt crisis.

“Today in the Bundestag, we have an important decision for the future of our country and for the future of Europe,” he said, as he called on rebels within the centre-right coalition to toe the line.

It had been predicted Merkel might need the support of the centre-left opposition to pass the bill.

Earlier, her own party, the Christian Democrats (CDU) and their allies had been pressuring a handful of dissidents to get in line.

Click here for a Q&A on EU transaction tax proposals

Before the vote took place, the CDU second-in-command Hermann Groehe, said “We are working to convince people.”

He said “it will be close” but the government would not put itself in the humiliating position of depending on the Social Democrats and Greens.

Lisa Paus, a member of the Green Party, told Al Jazeera that the opposition supported Merkel in spite of the large public dissent against the move because the bailout is necessary.

“They say almost 70 per cent of Germans said, ‘do not vote for this, say no’. We said yes because we know it’s necessary,” Paus said.

“It is necessary now to do this but we also know it is not sufficient.”

She said people are not behind the bailout fund because Merkel is “just running after the markets” and has not explained “what is happening to the people”.

“What is necessary now is to have a chancellor who tells the whole story, who tells what had already happened during the last 1.5 years,” Paus said.

“If she doesn’t do that, then it’s true what the people are afraid of – that these 211bn euros Germany is guaranteeing, will really go bust.

“What we need is a sustainable strategy which looks to the future and which talks to the markets and tells them what they really want to know [and] where Europe wants to go.”

Review of Greek debt

International auditors from the European Commission, along with those from the European Central Bank and the IMF, began talks with Evangelos Venizelos, the Greek finance minister, on Thursday, reviewing Greece’s attempts to reduce its debt levels.

Sources at Greece’s finance ministry said that the first round of talks were “positive and constructive”, a much warmer commentary than earlier this month when the audit team left Athens abruptly without agreement.

Venizelos welcomed German parliamentarians having voted in favour of bolstering a European rescue fund.

“Greece has sent a very clear and decisive message at an international level that it meets its obligations,” he said.

The minister also promised to submit legislation to the Greek parliament next week, reducing public sector pay scales and scrapping numerous bonuses – the latest cost-cutting measure to prompt anger from unions.

Eurozone members are in the process of ratifying proposals put forward in July, one of which would see private lenders writing off about 20 per cent of their loans to Greece.

The auditors endorse the country’s latest austerity measures for Athens to receive its latest tranche of bailout funds and meet its debt obligations.

On Wednesday, the EU’s executive proposed a EU wide tax on financial transactions which it said would raise $78bn a year, despite resistance from the UK and national banks across the continent.

The EC proposals for the tax, which would take effect from January 2014, will need unanimous approval from all EU states.

Source: Al Jazeera, News Agencies


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