CHANCELLOR ANGELA Merkel has expressed confidence that rebels in her government will fall into line and back today’s Bundestag vote to expand the EFSF (European Financial Stability Facility) bailout fund.
Parliamentary leaders in the ruling Christian Democratic Union and Free Democrats spent yesterday evening urging doubting MPs to back the Bill – or risk bringing down the government.
“I’m confident that our government parliamentary parties will win their own majority,” said Dr Merkel yesterday, acknowledging that “the world is watching this vote”.
Expanding the scale and scope of the EFSF to an effective lending capacity of €440 billion will see Germany’s contribution rise from €123 billion to €211 billion.
The move has sparked controversy among the government parties, though opposition leaders have vowed to back the Bill, making it almost certain to pass. In a final test ballot, 13 Christian Democrat deputies withheld their support. Dr Merkel can afford only 11 rebels if she is to win an absolute majority – the so-called “Chancellor” majority – of 311 votes in the 620-seat parliament.
Sensing defeat on that front, the German leader said yesterday she would be happy with a simple parliamentary majority.
Today’s vote ends months of emotional debate in Germany about whether further bailouts would help or hurt in the euro zone crisis. Last-minute confusion came after weekend speculation that the EFSF might have to be enlarged for a second time.
“I’m for closer European integration but am worried that enlarging the EFSF takes us down precisely the wrong path,” said one Christian Democratic rebel deputy.
Government deputies complain that they have been bombarded with contradictory information about the consequences of supporting the enlarged bailout fund.
In a policy paper, for instance, the bailout-critical Centre for European Policy warned deputies that the reformed EFSF “opened the possibility of further payments of individual euro states, which could lead to an uncontrolled burden on the budgets of these states”.
Complicating today’s vote further are fears about Greece’s financial future and reform efforts.
Yesterday Dr Merkel conceded that the second, €109 billion Greek bailout package might have to be renegotiated.
“We are trying to avoid a Greek insolvency, but I cannot rule it out,” she said. “We have to wait for what the troika finds out and what it tells us: do we have to renegotiate or do we not have to renegotiate”
German economists who advise Dr Merkel have joined international calls for recession-wracked Greece to default on half of its debt. Former ECB chief economist Otmar Issing said yesterday that Greece “will not get back on its feet without a serious reduction in debt – 50 per cent, probably more”.
Meanwhile, former Bundesbank president Axel Weber has warned that the EU “cannot afford” to move backward on integration. He blamed ongoing euro zone instability on market doubts “about whether Europe still stands by this currency”. Mr Weber described the ECB bond-buying programme, which prompted his resignation from its governing council in April, as an unacceptable “politicisation” of the Frankfurt institution. “These are highly political questions which one cannot leave to a group of technocrats,” he told Die Zeit. “The privilege to be independent brings with it the obligation to concentrate on one’s core obligations.”