Merkel sees off backbench revolt to secure EU fund

 

CHANCELLOR ANGELA Merkel has seen off a backbench rebellion in Berlin by four votes and won parliamentary support to bolster the European Financial Stability Facility (EFSF) bailout fund.

The motion to expand the fund’s capacity to €440 billion was, thanks to opposition support, carried by a comfortable 523 to 85 votes yesterday.

The vote was a political victory for the German leader, but a narrow one: just four votes above the absolute “chancellor” majority she demanded as a show of support from her party’s backbenchers. She did not need to rely on opposition votes.

Markets reacted positively to the result while the European Commission said ratification across the EU was on course for completion in mid-October.

“With half the world watching, it was good that the Bundestag passed the enlarged EFSF with such a majority,” said Dr Merkel’s spokesman Steffen Seibert.

After emotional debate and heavy lobbying, some 315 MPs from the government coalition voted in favour while 13 voted against. Some 10 No votes came from Dr Merkel’s own Christian Democrat camp while three MPs from the junior Free Democrats also voted against. Each party had one abstention.

“Coalition unity was stronger than dissent,” said Christian Democrat chief whip Peter Altmaier.

“But we will have to deal with this issue for some time to come.”

Even before yesterday’s result green-lighting an increase in Germany’s loan and guarantee EFSF contribution to €211 billion, government rebels had packed up and moved on to the next bailout battle front. They have set their sights on the Bundestag vote for the permanent bailout mechanism, scheduled for the new year.

Ahead of yesterday’s vote, finance minister Wolfgang Schäuble hit back at claims the government was trying to “trick” the lower house of parliament into backing the EFSF and immediately enlarge it further. “If anything changes in the future, the Bundestag will have to decide,” he said. He denied the enlarged EFSF would be “leveraged” to provide a greater lending capacity in future, but he conceded that the fund’s loans and guarantees would be used “as efficiently as possible”.

On Greece, Mr Schäuble said the decision on the next tranche of funds to Athens will come on October 13th, warning that it would take “a decade and not a year” for Greece to recover.

Government rebels were unrepentant yesterday in their opposition to the EFSF bailout. “This vote wasn’t about ‘rescuing’ individual EU members but recapitalising banks that speculated recklessly,” said Dr Peter Gauweiler, a government MP. “The EU states – Germany too – have allowed themselves to be brought into this blackmail situation.”

Ahead of the vote, Germany’s opposition attacked Chancellor Merkel’s crisis management and European credentials. “I am sure that we will not get around a default with private sector involvement for Greece,” said Peer Steinbrück of the opposition Social Democrats. The German political establishment had “failed to deliver a new narrative on Europe,” he said.

“Instead we have reduced Europe to a currency union, internal market and services directives and drowned people in technical terms and acronyms,” he said. “We have reduced Europe to an intergovernmental event of 26 men and one woman.”

Taoiseach Enda Kenny said he would be congratulating Dr Merkel at an EU summit in Warsaw. “I think that’s a very important statement from Germany,” he said. “The chancellor has made it clear . . . that Germany would not let down the euro. This is good news and I hope all other countries who signed on for the conditions set out in the July 21st meeting will implement [them] as Ireland is doing.”