Merkel allies warn against rash financial decisions

14th August 2011, Comments 0 comments

Members of German Chancellor Angela Merkel's coalition this weekend warned against any rash decisions to further help debt-ridden European partners in the face of growing financial turmoil.

The warnings, issued by leading members of Merkel Christian-Democratic (CDU) party, come ahead of an emergency meeting Tuesday between the chancellor and French President Nicholas Sarkozy to discuss the crisis.

Their message included:

- Calls for an emergency meeting of the CDU on the crisis.

- A plea by the CDU parliamentary speaker for the government not to railroad measures to strengthen the European Financial Stability Facility (EFSF) through the Bundestag.

- And harsh criticism of the latest European Central Bank (ECB) moves to help debt-ridden Italy by buying up its bonds.

Other members of the ruling coalition, the Free Democrats (FDP) and the Bavarian Christian-Union (CSU), have also stepped their campaign against talk of bringing in eurobonds to help eurozone laggards.

And even strong advocates of European political cooperation such as Financial Minister Wolfgang Schaeuble, sometimes described as the "last European" in Merkel's government, has warned nothing should be rushed.

"We are going to reinforce the stability pact" but "we can only do it step by step", Schaeuble told the latest edition of Spiegel magazine.

Germany has made strict budgetary discipline among the 17-strong eurozone group, and sanctions against those that mismanage their finances, a condition of further support.

But a number of CDU members of parliament have called for an emergency party meeting before any new government commitments.

"You can't just take decisions and then tell the party they cannot be changed without upsetting the markets," Philipp Missfelder, president of the CDU's presidium told the Frankfurter Allgemeine Zeitung on Sunday.

"If we extend financial help to Italy or agree to a transfer union then the party conference has to be brought forward," he added.

The party's annual conference is currently scheduled for November.

"If a decision about the euro crisis is taken in September, then a party meeting in November is too late," another CDU MP, Klaus-Peter Willsch, told the newspaper.

Meanwhile, parliamentary speaker Norbert Lammert warned Merkel against attempting to push measures to extend the EFSF through parliament next month.

"The European recovery mechanism issue is so important that parliament cannot debate it with the necessary care and vote on it in the course of just a few days," Norbert Lammert told the press.

"It will hardly be possible to deal with the matter between September 20 and 23," the time slot allocated by the government to push through the measures decided by European leaders on July 21 in a bid to strengthen the EFSF fund to guarantee Greek bonds, he added.

European governments want to rush measures through their respective parliaments to steady the nerves of financial markets which saw panic selling over the past week.

Merkel is assured of a majority in parliament -- where even the opposition Greens and Social-Democrats have said they would vote for the EFSF measures -- but there is fear of creating rifts within the ruling coalition, some of whose members are angry about what they see as attempts to reform the euro-zone through the back door.

A number of leading CDU members have also criticized the ECB's recent intervention in the markets to buy up Italian government bonds>

"This does not reflect (the bank's) mandate and eases pressure on countries concerned to clean up their budgets themselves," Volker Bouffier, the CDU minister-president of Hesse told Spiegel magazine.

And a number of FDP leaders have also spoken out against talk of introducing eurobonds which could assist the ECB's efforts.

"We won't hand out a blank cheque to buy other country's bonds," FDP parliamentary group leader Rainer Bruederle told the Tagesspiegel newspaper.

FDP leader Philipp Roesler, who is both economic minister and vice-chancellor, has also spoken out against the issuing of euro-bonds.

© 2011 AFP

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