German Lawmakers Approve Euro Rescue Package

May 21, 2010 - 7:57 AM
Berlin (AP) - German lawmakers on Friday approved their country's share of the massive rescue deal to save the euro and contain the debt crisis, as EU finance ministers gathered in Brussels to create new budget rules to win back financial markets' confidence.
 
The lower house of parliament voted 319-73 with 195 abstentions in favor of the plan -- sending it to the upper house, which represents Germany's 16 states and where Chancellor Angela Merkel's center-right government currently controls a majority, for a decision later in the day.
 
The euro750 billion (nearly $1 trillion) package was drawn up two weeks ago. Germany, Europe's biggest economy, is to contribute between euro123 billion and euro147.6 billion in loan guarantees. It comes hard on the heels of a separate package to rescue Greece -- which was already unpopular with Germans.
 
"We have to put into effect what we have agreed, because markets will only trust when it is actually in effect," Finance Minister Wolfgang Schaeuble told lawmakers. "The reality is that the markets look more at Germany than at Cyprus or Malta ... so it is right, in order to win markets' confidence, that we decide so quickly."
 
Merkel had called for lawmakers' approval on Wednesday, declaring that "if the euro fails, then Europe fails."
 
"We are not doing this out of generosity toward others; we are doing this in our own best national interest," Schaeuble said. "And this national interest means remaining integrated into a Europe growing further together."
 
Nearly two-thirds of German exports go to other eurozone countries, and "if we didn't have the common currency, we would have much less economic potential, less prosperity and less social security," he added.
 
Two opposition parties abstained and the third, the hard-left Left Party, voted against the measure.
 
Lawmakers rejected an attempt by some in the opposition to force a delay in the debate. The Greens argued that it wasn't necessary to vote on Friday and that parliament still needed to see more details.
 
The biggest opposition party, the Social Democrats, abstained on the grounds that separate undertakings given by Merkel to seek taxation of financial markets weren't specific enough.
 
A senior lawmaker with the SPD criticized Merkel for not moving fast enough to regulate markets which many blame for worsening both the current crisis and the banking crisis of 2008.
 
"It is noticeable that we move at different speeds depending on whether it's about saving banks or calming nervous financial markets, or whether it's about defending citizens against these financial markets by regulating," Thomas Oppermann said.
 
Germany has pushed hard for aid to debt-laden European countries to be coupled with requirements to bring down deficits.
 
In Brussels later Friday, finance ministers were to start thrashing out tighter budget rules and sanctions at a meeting with EU President Herman Van Rompuy. Final proposals are expected in the fall.
 
Schaeuble will suggest that all EU countries be legally required to limit their deficits to 3 percent of GDP as part of a tough package that could also threaten persistent rule-breakers with being ejected from the euro or losing EU voting rights.
 
Germany wants legal changes that would require amending the EU treaty -- triggering a process of parliament votes and referendums that could take years.
 
EU officials are calling for something less ambitious that could be put in place more quickly. They suggest that European ministers discuss budget plans before they go to national parliaments to make sure none are running up excessive debt.
 
However, British treasury chief George Osborne opposed that plan because "national parliaments have to be sovereign, they have to be the first people told about the important tax and spending decisions that countries like Britain have to take."
 
He said he had "many allies" from other EU countries "who understood that that we have got to be accountable to our national parliaments."
 
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Associated Press writer Aoife White contributed to this report from Brussels.