German firms urge rejection of stability mechanism

 

EUROPE’S PERMANENT bailout fund is a legal and financial “black box” that should be rejected by German MPs, according to an association representing the country’s family-owned companies.

A protest letter signed by 350 of Germany’s best-known companies such as Kärcher, Henkel and Würth attacks the bailout fund and disputes what it calls the “myth that Europe can only survive as a transfer union”.

The companies take issue with “political whitewash” over the euro, which it sees as a “driving force for dispute, jealousy and hate” in today’s Europe.

“The coercion and consequences of a common currency are beginning to divide European peoples permanently,” said the statement. “Not every means is permitted to save the euro – and those who want to save the euro at any price risk the price being Europe.” With its statement the association joins a growing wave of protest against the European Stability Mechanism in Germany.

Agreed by EU leaders last July, the ESM is scheduled to begin working next month as a permanent bailout fund with a total financial capacity of €700 billion.

After months of stand-off with the political opposition, German chancellor Angela Merkel’s government is on course to vote on the ESM and the fiscal treaty before the summer break – possibly as early as next week.

Her insistence on linking the two votes created a ratification delay and political uncertainty in Berlin: the fiscal treaty enjoys cross-party support while the ESM is far less popular, particularly among backbenchers.

Dr Merkel says the two pieces of legislation are interdependent and must be voted on together. Analysts suggest a strategy to limit revolt in her own ranks.

At least 10 government MPs are planning to vote against the ESM. They are calling for a “debt-conversion mechanism”, allowing crisis countries to receive funds and retain budget sovereignty while participating in an International Monetary Fund-chaired arbitration procedure with creditors to decide on debt write-downs.

Anti-ESM demonstrations have been held in Munich and, yesterday, before the Reichstag in Berlin. The protest was organised by the Civil Coalition, which has an anti-ESM video on YouTube.

“Our video has been translated into 14 languages and viewed one million times around Europe. Over one million protest emails have reached our politicians,” said Beatrix von Storch, head of the Civil Coalition. “Nothing like this has ever happened before.” Opponents of the ESM have vowed to challenge the fund at Germany’s constitutional court in Karlsruhe.