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Germany approves euro-crisis fighting tools

The Local · 30 Jun 2012, 10:40

Published: 30 Jun 2012 10:40 GMT+02:00

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Hard on the heels of a "breakthrough" EU summit, Merkel dashed back from Brussels to address lawmakers before the Bundestag lower house and Bundesrat upper chamber voted by a two-thirds majority to back new budget rules and a permanent bailout fund.

"What we decide today is an important step to make clear to the world that we stand by the euro, we want it as our stable currency," Merkel said earlier in her second speech to parliament on the euro crisis in three days.

As they have done since the start of the eurozone debt crisis, members of the two main opposition parties backed Merkel who needed their support since the fiscal pact entails changes to the German constitution and thus required a two-thirds majority of lawmakers in both chambers.

Merkel also defended decisions by EU leaders which included agreeing that the EU's new European Stability Mechanism (ESM) fund could recapitalise banks directly and that the bailout funds can buy up bonds of ailing nations.

She said any use of the bailout funds would follow agreed guidelines, calling it a "good decision, a sensible decision" and stressed any changes or new functions would have to come before the parliament first.

German Finance Minister Wolfgang Schäuble said Merkel had "defended and imposed exactly what had been German government policy for years," namely firm conditions in exchange for aid.

"Today, with the adoption of the fiscal and ESM treaty in the Bundestag and Bundesrat, across party lines, Germany is sending an important sign," Merkel said before the votes.

"It is a sign of unity and determination, domestically and abroad, a sign of overcoming the European debt crisis, sustainably, and a sign that, for us, Europe means our future," she added.

Late on Friday, in the Bundesrat representing Germany's 16 regional states, 65, out of the 69 who voted, approved both the fiscal pact and ESM.

Weeks of horse-trading with the centre-left Social Democratic Party (SPD) and ecologist Greens meant Merkel could be quietly confident of parliament's approval, but the EU deal struck had earlier rattled some lawmakers.

SPD budgetary affairs expert Carsten Schneider, earlier on the micro-blogging site Twitter, accused the government of a "U-turn" with regard to the ESM decisions in Brussels.

To obtain enough votes, Merkel had to give some ground on SPD and Green party demands for growth measures, and secured support of regional leaders with measures to offset the impact on regional finances of new demands for budgetary rigour, among other things.

SPD chief Sigmar Gabriel said during the parliamentary debate ahead of the votes: "We are agreeing because Europe is more important to us than the party political profile."

The fiscal pact, of which Merkel was the main architect, has been signed by 25 of the EU's 27 members and enshrines stricter budgetary rules aiming to prevent excessive public deficits that touched off the eurozone turmoil.

The €500-billion-euro ESM is due to take over from the European Financial Stability Facility and cannot be established without Germany's backing.

The fund was originally to begin operations on July 1st but is now widely expected to be pushed back.

Story continues below…

Germany is also facing a delay after President Joachim Gauck agreed to a request by the constitutional court to refrain from signing off on the two laws immediately after their parliamentary approval.

The court said that it would need up to three weeks to examine a legal challenge by the far-left Linke party.

Germany's top court has a history of strengthening the role of the parliament on European issues.

The Bundestag will likely be called on to vote on aid for Spain and Cyprus in the coming weeks.


The Local (news@thelocal.de)

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Your comments about this article

11:42 June 30, 2012 by blackboot11
My question is :

Why is it that the German press continually posts the most unflattering fotos of Kanzlerin Merkel? We all take some good and some bad pics.

Have a bit of respect here people.

This form of presenting the news does not reflect well on you either.

If you are not in agreement with what she says or does than you should sharpen your own journalism skills and present your point(s) in a more convincing way with your scripts and not these cheap shots (pics).
13:00 June 30, 2012 by Bushdiver
Whether or not this is a good idea remains to be seen. If you keep pouring money into anything you can keep it afloat. The question is, is where does all this money keep coming from? The German public hasn't started rebelling yet because up to now it hasn't been hitting people in their wallets. Sooner or later at the pace they are giving money away the day will come where more money is needed and tax increases will start coming and we all know how much Germany loves taxes. This is hardly the silver bullet everyone has been hoping for. Things will get much worse before they start to get better, if it gets better at all. By the way. Who wants to buy up bonds from failing countries. A big risk in any case. If all goes well you make tons of money on the other hand if things go bad someone will be eating a lot of debt.
13:07 June 30, 2012 by Buddy Dickerson
The Greeks are the Titanic the euro will crash … these guys are playing the fiddle and trying to bail out Spain, Ireland, Greece Italy and Portugal is like trying to bail water out of the Titanic with a child's beach bucket.

The German people should take a look back in history and remember another time ... they should have stopped their government.

Europe has bigger problems than the leaves on the tree with the Euro. In The Plot to Overthrow by a fellow named Mohammad Goldstein he lays out the big picture on the horizon. Obama, senators and every congressman has a hard copy and you can get it for nothing on the net. This American movement will slap the silly out of your politics.
13:58 June 30, 2012 by TheCrownPrince
It seems the Bundestag has learned nothing from the history of german parliamentarianism. After 1933 this is the second "enabling act" in german history: the parliament has just accepted to transfer important budgetary rights to some faceless ESM-blokes who have the power to demand more money from Germany whenever necessary without the need to justify this demand. Will the BVerfG stop this madness?
14:59 June 30, 2012 by smart2012
German press is one sided, as I can see from comments above. Do not look at one tree, look at the full forest. German in the last 3 months has lost the manufacturing momentum as europen partners have reduced demand. It is not a question of pouring money (u will get them back), it is a question of having business and Germany is dependent on the countries above. If GDP will go down (as it happened in the last 3 months) Germany will never be able to pay the 2000 billion dept Germany owns (biggest dept in eu). Thx god sarkozy is gone and we have competent people in eu like Monti...
15:06 June 30, 2012 by Kennneth Ingle
The German parliament has a bad habit of overwhelmingly approving Euro-crisis fighting tools although few of the MPs have any idea about what is really going on.

This rallying around Chancellor Angela Merkel, for party power reasons, just prolongs ­ and worsens ­ the situation.. while nobody would deny the Germany government¦#39;s political commitment to the single currency, the basis for a successful Euro is still missing.

With all the Euro-zone countries demanding national sovereign power, which includes of course, different tax, employment and social systems, the one currency conception is bound to fail.

Instead of encouraging the selfish indulgence of financial inability within the governments of Greece, Spain and Italy, by the misusing German taxpayers money, to rescue credit institutes from the fatal escapades of their own managers, the simple but most effective answer to this problem would be: No more money transfers, until a foundation has been formed upon which the Euro-house can stand. Germany is paying the bill, so Germany also has the right to call the tune, everything else is MUMPITS.
22:31 June 30, 2012 by Englishted
These tools seem to be a very large stick and a miniscule carrot .
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