Sunday 22 October 2017

Relief for Merkel as she wins vote on Spanish bank aid

angela-merkel
angela-merkel

Annika Breidthardt and Michelle Martin

Opposition support helps chancellor as rebels warn of cost to German taxpayer

GERMAN Chancellor Angela Merkel easily won a parliamentary vote on a eurozone rescue package for Spanish banks yesterday despite growing unease in her centre-right coalition about the rising cost of Europe's debt crisis for German taxpayers.

Ms Merkel, who won broad opposition support, managed to secure a simple majority from her own coalition in the Bundestag lower house of parliament, whose members were recalled to rainy Berlin from their summer recess for this one-day session.

With each vote on the eurozone's debt crisis, concern about Germany's creeping liabilities has hardened, prompting a growing number of coalition lawmakers to rebel in recent decisions and cramping the government's room for manoeuvre in European policy.

Votes

The Bundestag backed the bailout by 473 votes, while 97 voted against, including 22 from Ms Merkel's coalition -- fewer than the 26 coalition deputies who rebelled in a more far-reaching vote on the eurozone's permanent rescue scheme, the European Stability Mechanism (ESM), last month.

Appealing to lawmakers to back aid for Madrid, Finance Minister Wolfgang Schaeuble said the slightest perceived risk of Spanish insolvency could trip up the entire 17-nation eurozone.

"Any problems in the Spanish banking sector are a problem for the financial stability of the eurozone," he said.

As in June's ESM vote, Ms Merkel -- whose tough stance on the euro crisis has boosted her popularity ahead of a 2013 federal election -- fell short of the symbolically important "chancellor majority", which would have required the support of 311 of her coalition's 330 MPs in the 620-seat chamber.

The result had largely been a foregone conclusion after the opposition said it would vote in favour.

"Spain is the fourth biggest economy in the eurozone and a couple of its banks need to be stabilised. If we don't do it, the country that suffers most is Germany, so it is in Germany's interests to help Spain," Andrea Nahles, deputy party leader for the main opposition Social Democrats (SPD), said.

But some lawmakers remain concerned that bailing out Spanish banks would not address the real problems in the eurozone and was unfair.

"The big countries in Europe get suitcases of money and the small countries in Europe get a 'sparkommissar' (austerity commissar)," said Frank Schaeffler, a backbencher from the Free Democrats (FDP), Ms Merkel's junior coalition partner.

"That's got nothing to do with justice," Mr Schaeffler, an outspoken critic of Germany's crisis policies, told lawmakers.

Spain applied for a eurozone bailout late last month as the state of its banking sector, laden with bad debts, deteriorated rapidly.

Yesterday, Spain's Bankinter posted first-half net profits down more than 77pc and said it had written down €275.2m against deteriorating real-estate assets.

Germany, Europe's largest economy, will guarantee almost 30pc of the new eurozone aid package, whose total value may reach up to €100bn.

Even though the opposition supported the Spanish bank rescue, Social Democrats said it would not allow direct recapitalisation of banks by the eurozone's rescue fund, which some lawmakers worry would be the next step.

Some lawmakers are concerned that Spanish banks, not the Spanish state, would be liable for the funds once it is transferred to the ESM from the current temporary bailout fund, increasing risks for German and other eurozone taxpayers. (Reuters)

Irish Independent

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