By Madeline Chambers
BERLIN, June 10 A media report that German
Chancellor Angela Merkel is not serious about implementing a
European financial transaction tax threatens to undermine an
initial deal struck last week with the opposition over the EU's
planned fiscal pact.
Der Spiegel weekly reported on Sunday that Merkel's Chief of
Staff, Ronald Pofalla, had said such a tax would not get passed
in the current legislative period so the centre-right coalition
could support the idea in principle knowing it would not have to
act on it any time soon.
Last week, the government and opposition parties agreed on
the outlines of a transaction tax proposal. On Monday, further
talks between senior party members are due to take place and
Merkel wants these to form a basis for a final deal when party
chiefs meet on Wednesday.
Saturday's agreement between euro zone finance ministers to
lend Spain up to 100 billion euros to shore up its banks will,
if anything, raise the pressure on her to quickly get opposition
support to ratify an EU deal on budget discipline.
She wants to push the pact through parliament in the next
few weeks together with a bill on the new European Stability
Mechanism (ESM) bailout fund which Spain may use, but needs the
opposition to get the required two thirds majority.
The Social Democrats (SPD) and Greens are insisting on a
plan for a transaction tax and measures to boost growth.
It would be a major embarrassment if Germany, which as euro
zone paymaster dictates much of its crisis response, missed its
deadline for ratification on July 1 when the ESM is due to take
Finance Minister Wolfgang Schaeuble tried to pressure the
SPD and Greens.
"It would be completely irresponsible not to ratify the
fiscal treaty," said Schaueble on ARD television, adding he
doubted a European financial transaction tax would be introduced
in this legislative term which runs until next year's elections.
He said on Saturday that Spain's decision to request aid
made it even more important to quickly ratify the fiscal pact
and ESM. Its greater flexibility makes the ESM preferable to the
European Financial Stability Facility (EFSF) to use for Spain.
The magazine report triggered an angry response from the SPD
"Ronald Pofalla's comments are a blow to the fiscal pact
talks," said senior SPD member Thomas Oppermann, adding they
sowed doubts as to whether the coalition really wanted a deal.
"We need an irreversible commitment to introduce a financial
transaction tax. There will be no formulaic compromises with the
SPD," he said.
Greens politicians said Pofalla was playing a dangerous game
if he wanted to outsmart the opposition on the transaction tax.
"Whoever plays tricks risks the failure of the fiscal pact,"
said senior Greens politician Volker Beck.
Germany will not be able to get a financial transaction tax
imposed across Europe due to opposition from Britain and some
other EU members.
But the paper agreed last week stated that if approval from
all 27 EU members was not forthcoming, Germany would seek
stronger cooperation ... with as many other member states as
possible", meaning at least nine EU countries.
SPD leaders stressed at the weekend that its support for the
fiscal pact was not yet a done deal.
"Agreement with the federal states is still needed and the
government has delivered little on growth and fighting youth
unemployment," SPD parliamentary party leader Frank-Walter
Steinmeier told the Frankfurter Allgemeine Sonntagszeitung.
"There must be movement on this in the coming days."
On Monday, Schaeuble will discuss the fiscal pact with
ministers from Germany's 16 federal states and parliamentary
leaders from all parties will also hold talks.
Highlighting the domestic pressure she is under to take a
tough line with struggling euro zone members, an Emnid poll for
Bild am Sonntag newspaper showed 66 percent of Germans are
opposed to supporting Spanish banks with German money.
However, the poll, conducted before the euro zone finance
ministers agreed to help Spain, also showed only 26 percent said
they were worried about the stability of the euro.