German lower house approves euro rescue package

21st May 2010, Comments 0 comments

Germany's lower house of parliament approved the country's share of a trillion-dollar rescue package for debt-hit eurozone nations Friday, after Chancellor Angela Merkel warned the euro was "in danger".

Merkel's centre-right majority handily assured passage of the bill to unblock up to about 150 billion euros (187 billion dollars) of the around 750 billion euros in loan guarantees.

The Bundesrat upper house was expected to give its green light to the so-called "shock and awe" package, cobbled together by the European Union and International Monetary Fund, in the early afternoon.

The crunch vote in Europe's top economy comes as a new EU economic task force was to hold its first meeting in Brussels to bolster economic and budgetary oversight among member states to head off similar turmoil in future.

The Brussels meeting of European finance ministers will be presided over by EU president Herman Van Rompuy and comes amid financial market doubts about Europe's unity in the face of the fiscal crisis.

German was approving the rescue package two weeks after a 110-billion-euro bail-out deal for debt-wracked Greece, which was hugely unpopular and contributed to a crushing setback for Merkel this month in a key state poll.

Merkel has faced accusations of shaky leadership during the crisis from abroad and even within her own conservative bloc.

This week she tried to impress upon Germans the importance of the measures, saying that the euro was "in danger" and warned of "incalculable consequences" for the European Union if the euro were to fail.

The doomsday language drew a sharp rebuke from French Economy Minister Christine Lagarde.

Finance Minister Wolfgang Schaeuble told the Bundestag Friday that approval of the package was crucial to market stability.

The bill must be passed "because markets trust it only once it has actually been implemented," he said. "It is a reality that markets look more at Germany than at Cyprus or Malta."

© 2010 AFP

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