German parliament backs Greece aid
German parliamentarians have voted by 496 to 90 in favour of the second EU/IMF bailout for Greece even though one of its chief proponents, German chancellor Angela Merkel, said there was “no 100% guarantee” it would succeed.
Merkel (pictured) had support from two opposition parties – the Social Democrats (SPD) and Greens – in getting backing for Germany’s support of the package.
Earlier in the day, the country’s interior minister Hans-Peter Friedrich told the Spiegel magazine Germany should provide incentives for Greece to leave the euro that the indebted country “cannot pass up”.
But Merkel told parliament: “No-one can predict what the repercussions of a disorderly default would be for all of us and also for the people of Germany.”
Greece must still approve €3.2bn of public spending cuts to receive the central aid, and officially has seven days after 20 March, its next debt repayment date, to make payments. While this clause exists in case markets are not functioning, Athens might still use it, for breathing room.
While Berlin’s vote is a major win for Athens, Merkel gave Greece a setback by standing against pressure to increase the next bail-out fund from its planned €500bn size, when it is established in July.
The size and function of this second rescue fund will be a major topic of discussion when EU leaders meet in Brussels at the start of March.
Bail-out fund expansion plans also received a problem when finance ministers of the world’s richest 20 nations, meeting in Mexico City, rejected requests the International Monetary Fund be involved in extra funding, at least until Europe itself produces plans that are “credible.”