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Germany approves €100 billion Spanish bailout

The Local · 19 Jul 2012, 19:41

Published: 19 Jul 2012 17:30 GMT+02:00
Updated: 19 Jul 2012 19:41 GMT+02:00

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In the 10th German vote on European crisis measures since the debt crisis began, lawmakers voted by 473 to 97 to pass the package worth up to €100 billion to pump in much-needed cash to the Spanish banking sector.

A handful of MPs from all parties, hauled back from their summer holidays, voted against the rescue package amid unease in Germany, Europe's top economy, that it is putting itself on the hook for ever more bailouts of debt-stricken countries.

While the package received broad cross-party support, the parliamentary head of the opposition Social Democratic Party (SPD) Frank-Walter Steinmeier said several MPs in his ranks were "totally unconvinced."

“How many rescue packages are we actually going to need?" asked Steinmeier. "It cannot go on like this."

Thirteen deputies abstained.

The vote was urgent as Madrid hopes to sign the formal agreement with eurozone finance ministers on Friday.

Opening the debate, Finance Minister Wolfgang Schäuble said "today is about giving Spain the necessary time to solve its banking problems.

"In this exceptional situation, we are helping the Spanish state to battle against the overblown nervousness of the financial markets and we are therefore making our contribution to the overall financial stability of the eurozone."

In total, there were 13 rebels from Merkel's conservative CDU/CSU party and nine from her junior coalition partners - with one abstention.

There were also 14 SPD deputies who voted against the package, with two abstentions.

Spain is hoping to get a first slice of €30 billion by the end of the month and has in turn agreed to a raft of banking sector reforms and EU inspections to ensure the restructuring process is effective.

Demonstrating the urgency of the rescue, a Spanish bond auction earlier Thursday resulted in sharply higher borrowing costs and lower demand, pushing rates on the secondary market up towards the seven-percent level seen as unsustainable.

The debate in Germany, which is putting up nearly 30 percent of the loans, has revolved around who is liable for guarantees.

EU leaders agreed at a summit last month that money from their permanent bailout fund could be used directly to finance banks but only once a comprehensive Europe-wide oversight body, probably under the European Central Bank, was in place.

Berlin has insisted that until then, the Spanish government is responsible for the loans - and for ensuring they are repaid.

"Spain makes the application, Spain gets the money to recapitalise its banks and Spain is liable as a country for the aid," Schäuble stressed.

Analysts were broadly relaxed about the parliamentary vote and it made few waves on the markets.

Story continues below…

Economists are eyeing what could be bigger speed bump on the road towards saving the euro on September 12, when Germany's top court rules on whether the eurozone's €500 billion permanent rescue fund can be passed into law.

The Federal Constitutional Court is to hand down its judgement on a raft of challenges to the European Stability Mechanism and the EU's fiscal pact after Germany's president withheld his signature, delaying their entry into force.

Observers expect the court to allow the key crisis tools to pass but may insist that Germany's parliament have a greater say in future rescue action, meaning Thursday's emergency vote is unlikely to be the last, analysts said.


The Local (news@thelocal.de)

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Your comments about this article

20:20 July 19, 2012 by smart2012
Guys, this is thanks to merkozy great strategy.. If something different and smarter would have been done 1 year ago, now we would not be in this situation.. Well done merkozy ;)

And I liked the comment from one of us ie guys, do not be "Opel" to the news :)
00:07 July 20, 2012 by jmclewis
How much money is needed to fill the bottomless hole of bailing out Spain & Greece?
10:08 July 20, 2012 by rumcajs
jmclewis, a lot of money..... I really mean A LOT :).

the funny thing here is that the banks create the money, they deside where to put it and when everything goes wrong, all of us have to get worried and try to do something, which is usualy as efective as a fart in the middle of a tornado. The goverments keep deffending a system that makes us compete with each other and encorage us to gain as much as we can at the expenses of the competition, but when a few "good player" manage to use the beloved free market to keep most of the cake OHHHHH, something went wrong! God save us! Now everybody has to pay!
11:43 July 20, 2012 by luckylongshot
Europe is failing under the burden of too much debt and so the logical solution is to reduce the level of debt by defaulting, However rather than allowing this to occur the German politicians throw €100 Billion of German taxpayer money at Spanish Banks that have no chance of ever repaying it. This only adds to the amount that Spain has to repay and so achieves the opposite of helping fix the problem. What is needed to address the problem of too much bad debt is debt write offs rather than destroying Germanys wealth in a futile attempt to stave off the inevitable. Hopefully the court will put an end to this treacherous political behaviour as it seems the politicians are more interested in serving the interests of the Rothschilds than the people who elected them.
14:42 July 20, 2012 by mayitoh
Hi, please somebody can explain what this mean, this new bailout approval from the German parliament? This was not already approved before by the German parliament? How many bailout are approving to Spain??? Or this is a simple kind of "by pass" to the previews one to Spain which was sent to the Supreme Court or Tribunal and it will be deliberated until next September? (See article here: "Court: no euro rescue decision until September" and also "EU helps Spain, Italy, but still no euro-bonds")...... How many bailouts package have been approving from German peoples money to save at all cost this European-Union-political-project? If this is approved by German people parliament representative, that's what really German people want?
09:32 July 31, 2012 by wenddiver
Govrnment- The fun of giving away other peoples money to foreigners who neither like or respect you, nor are entitled to it.
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