German cabinet approves euro crisis fund

Germany’s cabinet Tuesday approved the country’s part of a trillion-dollar rescue package of loan guarantees for crisis-hit euro countries, backed by the International Monetary Fund, the government said.

“The measures send a clear signal that the markets can rely on the financial stability of the euro area and that speculating against the eurozone doesn’t pay,” deputy government spokesman Christoph Steegmans told a regular briefing.

Berlin is expected to make available at least 123 billion euros (157 billion dollars) for the fund, designed to help debt-wracked eurozone countries that might get into similar fiscal difficulties as Greece.

Officials have warned, however, that Germany’s slice is likely to be higher — up to 150 billion euros — as countries for which the fund is designed will not be contributing.

A draft of the bill stated that Berlin’s portion could be up to 20 percent higher than the 123-billion-euro official share.

The fund — the eurozone stabilisation mechanism — unveiled in the early hours of Monday after marathon talks in Brussels, has been dubbed “Shock and Awe” for its size and it was immediately cheered by markets.

But following an unpopular bail-out package for Greece, for which Germany is stumping up 22.4 billion euros over three years, this latest dip into the coffers provoked outrage in some parts of the media.

Mass circulation daily Bild screamed on its front page: “Yet again, we are the idiots of Europe.”

“Germany is providing the lion’s share of the loans. If they are not paid back, it is the taxpayer who will have to fork out,” the paper added.

Also provoking anger was the fact that the cabinet’s decision came a day after Chancellor Angela Merkel announced there was no money for tax cuts and any relief would come only after 2012.

“It’s unbelievable. With a gigantic 750 billion euros, the EU and the IMF want to save the euro. Germany’s contribution alone for our bankrupt neighbours is 123 billion euros. Yet there is no money for us to cut taxes,” said Bild.

Broadsheets were also sceptical about the package, with daily Die Welt saying: “All that has been won is a little time — how much is unclear at present.”

The law approved by the cabinet now goes to both houses of parliament for a vote, which are expected to pass it.

— Dow Jones Newswires contributed to this story —