German MPs green-light unpopular Greek aid

7th May 2010, Comments 0 comments

German MPs approved Friday emergency aid to Greece despite strong popular opposition two days before a state election that could seriously weaken Chancellor Angela Merkel's governing coalition.

In total 390 voted in favour, 72 against and 139 abstained. The bill now goes to the Bundesrat upper house and then the president before Merkel can jet to a high-stakes EU summit later Friday with the legislation in her pocket.

"We must defend the stability of the common European currency. That is what this is all about," Finance Minister Wolfgang Schaeuble said in the lower house parliament in a debate before the vote.

"And at the same time we are defending the European Union. That is the decision we are taking today, in a time of great uncertainty among people and on financial markets, not just in Europe."

Opinion polls have shown a majority of voters oppose lending Greece the 22.4 billion euros (28.2 billion dollars), but Merkel's coalition has enough votes in the upper house to ensure it will pass -- for now.

The result of Sunday's legislative election in North Rhine-Westphalia, Germany's most populous state, could result in Merkel losing her majority in the upper house, eight months after winning a second term.

Germany is the biggest contributor among eurozone nations to a three-year, 110-billion-euro bailout hammered out between the EU, the International Monetary Fund and Athens in exchange for drastic austerity measures.

The deal has failed to soothe market concerns that Athens will default on its huge debts or that other eurozone members with shaky finances like Portugal or Spain will need help.

A wave of panic selling engulfed Asian markets on Friday, after US shares saw a record intraday fall. European markets also moved moderately lower on Friday morning, with Paris the worst-hit, off 1.43 percent.

The cuts in spending have also provoked days of violent protests in Greece. Three people including a pregnant woman died in a bank firebombed by protestors this week.

German mass-circulation daily Bild has dubbed the aid "the fattest cheque in history." The latest survey showed 56 percent of voters thought providing aid to Greece was wrong.

After months of falling ratings, surveys in North Rhine-Westphalia, home to 13.5 million voters, have shown that Merkel's centre-right coalition has its work cut out to retain its majority in the state's legislature.

The loans "are not risk-free. But if there is a fire you have to grab hold of the nearest fire extinguisher," Foreign Minister Guido Westerwelle of the pro-business Free Democrats told Bild in comments published on Friday.

A group of eurosceptics who tried to stop Germany adopting the euro in 1998 planned to file an injunction later Friday saying the aid contravenes EU regulations stating that no EU member state may assume another's debts.

But Berlin is confident the challenge will fail.

"No European treaty forbids us from acting if we see danger for our currency and therefore for our citizens," Westerwelle said.

Merkel, who has also been accused in Germany and abroad of dragging her feet over aid to Greece and thereby exacerbating the crisis, wants an EU summit starting Friday to get the ball moving on giving fiscal rules more teeth.

Merkel and French President Nicolas Sarkozy issued a joint statement on Thursday ahead of the Brussels talks calling for a new "robust framework" for policing public finances.

© 2010 AFP

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