German lawmakers approve Greek bailout despite qualms

BERLIN Fri Nov 30, 2012 5:15pm IST

A Greek flag flutters in front of the moon in Athens November 26, 2012. REUTERS/Yorgos Karahalis

A Greek flag flutters in front of the moon in Athens November 26, 2012.

Credit: Reuters/Yorgos Karahalis

Related Topics

BERLIN (Reuters) - German lawmakers approved the latest bailout for Greece on Friday by a large majority despite growing unease about the cost to taxpayers less than a year before federal elections.

The outcome of the vote in the lower house was never in doubt but it was a test of Angela Merkel's authority over her centre-right coalition. She did not manage to draw an absolute majority from her own ranks after 23 of her lawmakers rebelled.

But with the main opposition Social Democrats (SPD) and Greens voting in favour with most of Merkel's bloc, the revolt had only symbolic value. Of 584 deputies present in the chamber, 473 voted for the bailout and 100 voted against.

The package, which aims to cut the Greek debt load to 124 of national output by 2020, coincides with increased speculation among German lawmakers and media that euro zone governments will eventually have to write off much of the Greek debt they hold.

Finance Minister Wolfgang Schaeuble said in the Bundestag debate that such speculation could undermine the Greek government's reform drive.

"If we say the debts will be written off (Greece's) willingness to make savings is correspondingly weakened. Such false speculation does not solve the problems," he said. "A Greek bankruptcy could lead to the break-up of the euro zone."

The government acknowledged for the first time this week that the bailout will mean lost federal revenues.

All week, German newspapers have reverberated with predictions, including from some coalition lawmakers, that Germany and other euro zone countries will eventually have to write off some of their Greek debt holdings.

Schaeuble said Germany was insisting on strict monitoring of Greece's reforms to ensure it met its fiscal targets, adding that the country's competitiveness was finally improving as a result of the austerity programme.

REBELS

Criticism of the Greek bailouts within Merkel's coalition has softened in recent months after she decided the cost of expelling Greece from the euro zone would be far greater.

The SPD has accused the government of deceiving German voters by insisting that no further writedowns of Greek debt will be necessary, but it is difficult for the strongly pro-euro centre-left party to make political capital out of this issue.

Merkel's policy of talking tough on austerity in Greece and other heavily indebted euro zone countries while making the necessary concessions to avert a messy default commands broad support in Germany, where the chancellor is as popular as ever.

"We will vote for it because we don't want our reliability as European partners left in any doubt. It has nothing to do with the government," Peer Steinbrueck, the SPD's candidate for chancellor in next year's election, said during Friday's debate.

SPD parliamentary leader Frank-Walter Steinmeier accused the government of putting off the "economically unavoidable" debt haircut for Greece for its own political reasons.

"You can postpone it until after Christmas, until after the Lower Saxony election, the Bavarian election or the federal elections, but it will come."

(Additional reporting by Matthias Sobolewski; Editing by Janet McBride)

FILED UNDER:

Reuters Showcase

Auto Sector

Auto Sector

Ford aims to triple exports from India with $1 billion plant  Full Article 

Micromax Stake

Micromax Stake

SoftBank-led group in talks to buy stake in Micromax - sources  Full Article 

Airwaves Auction

Airwaves Auction

Top three mobile operators spend $13.6 bln in airwaves auction  Full Article 

Insurance Sector

Insurance Sector

Australia's IAG to up stake in joint venture with SBI  Full Article 

Accenture Results

Accenture Results

Accenture raises revenue growth forecast for second time  Full Article 

GAIL's Plans

GAIL's Plans

GAIL seeking 7 LNG cargoes from Oct. 2015-Dec. 2016 - tender document.  Full Article 

Eyeing Pininfarina

Eyeing Pininfarina

Pininfarina confirms Mahindra interest, says no deal yet  Full Article 

SH Kelkar IPO

SH Kelkar IPO

SH Kelkar files prospectus for IPO, seen at around $100 mln  Full Article 

Australia Beat India

Australia Beat India

Smith shines as Australia down India to reach final  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage