German MPs vote to back second bailout for Greece

Tue, Feb 28, 2012, 00:00

GERMANY HAS given its backing to a second Greek bailout after Chancellor Angela Merkel warned that blocking it carried “incalculable and irresponsible” risks.

Of the 591 Bundestag MPs present yesterday, 496 backed the package while 90 were opposed, mostly from the Left Party. Some 17 coalition MPs voted against and three abstained, leaving Dr Merkel seven votes short of an absolute majority excluding opposition MPs. This symbolic “chancellor” majority is viewed in Berlin as a test of political authority.

Ahead of the vote, glum MPs filed into the Bundestag chamber aware that the latest Greek bailout, contained in a 726-page resolution, is unlikely to be the last. Just a third of their voters are in favour, reflected in a Bildtabloid splash headline urging MPs yesterday to “stop the madness” and vote against.

“I know there are those who say Greece is a hopeless case, that it should reintroduce the drachma to allow it boost competitiveness and that the euro zone would be better without Greece,” said Dr Merkel, in a nod to her interior minister who suggested just that in Der Spiegel. These views “had their merits”, the German leader conceded, but ignored the “incalculable and therefore irresponsible” risk that a disorderly Greek default held for other programme countries, the rest of the euro zone and the global economy.

“As German chancellor. . . I’m often obliged to take risks, but I’m not permitted to embark on misadventures, that’s why I ask you to support this proposal,” she said.

She reminded MPs that bailouts had achieved progress in Portugal, Ireland and elsewhere.

“In 2011 Ireland didn’t just meet but surpassed its deficit targets, it carried out important reforms, particularly in the financial sector . . . on foot of rising competitiveness we can already say the investors are already returning,” said Dr Merkel.

Opposition Social Democrat (SPD) Peer Steinbrück, Dr Merkel’s former finance minister, said the chancellor’s euro zone crisis strategy involved “lots of clouds, lots of pirouettes” but ignored the fact that “financially, Greece is precisely where it was two years ago”.

“The strict austerity thumbscrews you have imposed have not helped get the country back on its feet but pushed the country into a downward spiral.”

After urging a concrete investment programme to stimulate growth in Greece, though, he called on the SPD to back the second bailout “to show awareness of our European responsibility”.

Green Party parliamentary co-leader Renate Künast said Dr Merkel was “playing the Iron Lady”, while betraying Germany’s European inheritance.

“Helmut Kohl wouldn’t have delayed one moment in this situation to move on European integration,” she said. “And you stand there clutching your handbag and your purse inside and say ‘We’re not giving anything’.” She, too, urged her party to back the bailout, leaving the opposition to the Left Party. Parliamentary leader Gregor Gysi said Germany should learn from its history and back a Greek investment plan similar to that introduced to rebuild post-1945 Germany.

“On Greece you are doing a Versailles,” he said, “when what we need is a Marshall Plan.”

Dr Merkel’s objection to using a bigger euro zone bailout fund makes it unlikely that leaders will reach a breakthrough on that front at Thursday’s EU summit.

However, there is some confidence that pressure from the global powers and bodies such as the IMF and European Central Bank will ultimately result in a German reversal. Sources believe, based on Dr Merkel’s record, that Berlin will wait until Greece delivers tangible reforms under its long-delayed second bailout before any climbdown.