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09/12/2016

German MPs back Greece bailout

Euro & Finance

German MPs back Greece bailout

Angela Merkel [European Council]

German lawmakers gave Chancellor Angela Merkel the green light Friday (17 July) to resume talks on a new EU-IMF bailout deal for Greece, after she passionately argued it was the last chance to prevent “chaos” in the crisis-hit country.

Merkel, like Greece’s hard-left Prime Minister Alexis Tsipras, faced rebels in her own party ranks, but still won broad approval from the chamber where her “grand coalition” commands an overwhelming majority.

The measure to seek a new 86-billion-euro ($94 billion) rescue package sailed through the Bundestag by 439 to 119 votes with 40 abstentions. A total of 60 members of German Chancellor Angela Merkel’s conservatives voted ‘No’, parliamentary figures showed on Friday.

The number of rebels more than doubled from a vote in February, when parliament extended a second bailout package, dealing a blow to Merkel and highlighting the strength of grassroots opposition to funnelling further aid to Athens.

Addressing the chamber before the vote, Merkel had argued that “we would be grossly negligent, indeed acting irresponsibly if we did not at least try this path”.

>>Read: Merkel faces treacherous Greece vote in Bundestag

It was Merkel — leader of the EU’s biggest economy and effective bailout paymaster — who spearheaded last weekend’s marathon Brussels talks that brought Greece back from the brink of crashing out of the euro, at the price of Athens accepting painful reforms.

The chancellor said there was “no doubt that the agreement of Monday morning was hard” but urged lawmakers to back the deal, calling it “a last try”.

She said if a compromise over Greece had not been reached, it would have meant “watching on as the country virtually bleeds out, people no longer getting their money, where chaos and violence could be the result”.

Equally, “bending the rules until they’re worthless” was not an option, she said, arguing that for Europe this “would mean the end of a community bound by legal rules, and we wouldn’t agree to that”.

That was why, she said, “we are making a last try in tough, tenacious discussions” to seal a third aid package, “despite all the setbacks of the past six months and despite all legitimate scepticism”.

Austria’s parliament also gave its government the mandate to open negotiations on a new bailout programme for Greece on Friday. A majority of lawmakers voted in favour of starting talks on a three-year bailout.

Austria would contribute €55 million. The Social Democrats (SPÖ) and the People’s Party (ÖVP) voted in support of the bailout.

‘Desperate pensioners’

The German vote came a day after European Central Bank chief Mario Draghi boosted a vital cash lifeline to Greece’s struggling banks that will allow them to open their doors for the first time in almost three weeks on Monday.

To prevent a catastrophic “Grexit”, parliament in Athens early Thursday (16 July) adopted sweeping reforms on pensions, taxes and labour laws that were harsher than those Greeks had rejected in a July 5 referendum.

The about-face sparked violent street protests and speculation of early elections in Greece, where the hard-left Syriza party came to power in January polls.

Eurozone ministers rewarded Greece on Thursday by approving a vital seven-billion-euro bridging loan and backing resumed negotiations.

>>Read: Scandinavians back Britain’s rejection of Greek bridge financing

Merkel and her hardline Finance Minister Wolfgang Schäuble have been harshly criticised for forcing more austerity on Greece, using the threat of a five-year euro “time-out” that had been floated by Schäuble.

Merkel, sometimes accused of lacking empathy amid the eurozone crisis, Friday touched on the suffering of the Greek people, for which she blamed the Tsipras government.

“Imagine just for a moment what it would mean here in Germany if desperate pensioners had to queue up in front of shuttered banks to wait for their 120 euros a week,” she said, speaking on her 61st birthday.

‘True colours’

If many commentators see Merkel as being too hard on Greece, dissenters at home complain she has been too soft, leaving German taxpayers to lend out billions they are unlikely to ever see again.

The mass-circulation Bild, which has long campaigned for a Grexit, on Friday published a list of “seven reasons” to vote ‘No’ and wrote that “today politicians must show their true colours”.

>>Read: Merkel: Trust in the Greek government has been restored

Germany is one of several EU countries whose parliaments must sign off of any debt deal for Greece.

The German vote was only about resuming official talks — a final deal with Greece will also need the assembly’s approval.

Dozens of lawmakers from Merkel’s conservative party had warned ahead of time they would vote against granting her government a mandate to resume talks.

However, that still left a broad majority across major party lines who voted to help Greece again and keep intact the 19-member currency union.

The public mood was mixed between pro-European sentiment, and anger with the Greek government.

A new Forsa poll Friday found 53 percent of respondents backed new talks, while 42 percent were against.

Schäuble — who says he personally thinks a Grexit would be best for the country — nonetheless urged his party-members to vote in favor, vowing: “We will do everything in our power to make this last attempt a success.”

The ECB on Thursday gave Greece badly needed breathing space by adding 900 million euros to a financial lifeline to cash-strapped banks, which have limited ATM withdrawals to 60 euros a day per person.

Draghi also sided with the IMF in saying Greece — with debts worth 180 percent of GDP — will need some kind of debt relief, an idea Germany opposes.

IMF chief Christine Lagarde on Friday reiterated the need to ease Greece’s crushing debt burden of 320 billion euros.

Asked whether the bailout plan could work without it, she said “The answer is fairly categoric: ‘No.'”