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28/09/2016

Bundestag backs third Greek bailout

Euro & Finance

Bundestag backs third Greek bailout

Wolfgang Schäuble [European Commission]

German lawmakers overwhelmingly voted in favour of a third Greek bailout on Wednesday (19 August), heeding a call from Finance Minister Wolfgang Schäuble to give Greece the chance for a new start, despite his own concerns it might not work.

The Bundestag, whose backing is essential for the release of bailout funds, approved the plan by 454 votes to 113, with 18 abstentions.

There was a sizeable rebellion in Chancellor Angela Merkel’s own party ranks, however, suggesting she cannot return to parliament to seek aid for Athens again.

A total of 63 members of German Chancellor Angela Merkel’s conservatives voted against a third bailout for Greece, parliamentary figures showed on Wednesday and a further three abstained.

Popular misgivings about sending more aid to Athens run deep in Germany, the eurozone country which has already contributed most to Greece’s two previous bailouts since 2010. The new package is worth 86 billion euros.

Schäuble, Germany’s toughest negotiator on the Greek bailout, led calls for a ‘yes’ vote in the parliamentary debate.

“Of course, after the experience of the last years and months there is no guarantee that everything will work and it is permissible to have doubts,” said Schäuble.

“But in view of the fact that the Greek parliament has already passed a large part of the measures it would be irresponsible to not use the opportunity for a new start in Greece,” he said, making the case for the government.

>>Read: Merkel battles worries about IMF involvement in Greek bailout

Schäuble had taken a tougher line than Merkel in bailout talks. Last month, he tabled the option of a ‘timeout’ from the eurozone for Greece, before then throwing his weight behind the new bailout plan.

Support from parties including the Social Democrats (SPD), Merkel’s junior coalition partner, and the opposition Greens ensured German approval of the bailout.

But in a blow to Merkel’s authority, dozens of conservatives vowed to oppose the bailout before the vote.

https://youtube.com/watch?v=2vNXRBmyppE

“The problem isn’t a lack of European solidarity but a lack of Greek efficiency,” said Wolfgang Bosbach, a member of Merkel’s conservative Christian Democrats (CDU).

Merkel stays mum

Merkel sat impassively during the debate on the bailout, as Greens co-leader Anton Hofreiter criticised her government for taking a hard line during talks leading up to the accord on the new bailout.

“A German government leadership that acts like that damages the cohesion in Europe and thereby damages Germany by damaging our standing in Europe,” Hofreiter said to applause.

In the Netherlands, Prime Minister Mark Rutte will face a no confidence motion later today, brought by his chief opposition rival over a broken campaign pledge not to provide additional emergency funding to Greece.

On Tuesday (18 August), the parliaments of Austria, Estonia and Spain voted to approve the bailout.

>>Read: Eurozone okays Greek bailout, wooing IMF on debt

In Berlin, Schäuble said Athens had clearly shifted ground in the last few weeks and was ready to reform.

He also reiterated the German view that it is imperative for the International Monetary Fund to stay on board. The IMF, however, says it won’t unless Greece gets debt relief, while Germany is against cutting Greek debt.

“I am fairly confident that we (international creditors including the IMF) will reach a joint assessment of (Greece’s) debt sustainability in October,” said Schäuble, reiterating that a debt haircut is not possible.

Last month, a record 65 lawmakers from the conservative camp broke ranks and refused to back the start of bailout talks.