Bloomberg News

Merkel Said to Tell CDU Greece Must Meet Conditions for Aid

September 06, 2011

(Updates with date of EFSF first reading in fourth paragraph, comment from CDU lawmaker in 11th.)

Sept. 6 (Bloomberg) -- German Chancellor Angela Merkel told members of her Christian Democrats that Greece will not receive aid payments due this month unless it meets conditions of the rescue, two party officials said.

The remarks, made at a meeting of ruling party lawmakers in Berlin late yesterday, were repeated by Finance Minister Wolfgang Schaeuble and reiterate existing policy, one of the officials said, speaking on condition of anonymity because the talks were in private.

“It was very clear that we expect Greece to meet its obligations, that there can’t be more aid without adequate behavior by Greece,” Peter Altmaier, the chief whip for Merkel’s Christian Democratic Union, told reporters after the talks. “But it was also very clear that we stand by our commitments within the euro stabilization and that we’re ready to maintain and defend the euro as our common currency.”

Merkel’s coalition is trying to appease voter anger at government moves to prevent a euro-region breakup by putting more taxpayers’ money on the line. The lower house will hold a first reading on Sept. 8 of a bill raising Germany’s share of loan guarantees to 211 billion euros ($297 billion) from 123 billion euros -- four days after Merkel’s CDU suffered its worst-ever result in an election in her home state.

“The basis for all these programs is that we provide aid under certain conditions,” Klaus-Peter Flosbach, CDU financial- policy spokesman in parliament, said in an interview. “There can be a situation in which we are no longer willing to help when the conditions aren’t met.”

Greek Contraction

Merkel’s government told Greece to step up its commitment to meeting budget-cutting targets on Sept. 2, saying that “reliability” is essential to counter the market turmoil spread by the debt crisis. It issued the reprimand after Greek Finance Minister Evangelos Venizelos said the economy’s contraction this year would be steeper than forecast.

“Greece must keep to the conditions or it just won’t get the money,” Hermann Otto Solms, the deputy floor leader and finance spokesman of Merkel’s Free Democratic Party coalition partner, told reporters in Berlin. Even so, any such move would have to be a “common decision” by euro-area governments and is not a matter for Germany alone to decide, he said.

For all the unease, a majority of lawmakers from Merkel’s bloc voted in favor of introducing the draft bill to revamp the European rescue fund at yesterday’s meeting, Altmaier said.

Votes Against

Twelve lawmakers voted against the bill and seven abstained, one of the officials said. Six lawmakers from Merkel’s Free Democratic Party allies withheld their support at a separate caucus meeting, Deutschlandfunk radio reported today.

The closed-door ballots were a test run before a plenary- session vote on Sept. 29. Merkel needs 311 ballots in favor of the changes from the 620 lawmakers sitting in parliament’s lower chamber, with her CDU/CSU and FDP bloc comprising 330 lawmakers. The opposition Social Democrats and the Greens have indicated they’ll support the bill, ensuring it will pass.

“There were 12 votes against in the CDU/CSU and several abstentions, but this isn’t the final decision about the law,” Michael Fuchs, deputy CDU leader in parliament, told Deutschlandfunk. “We still have to discuss parliament’s say in the matter. Some people have concerns on that score. After these discussions, those colleagues of mine will back the law.”

--With assistance from Tony Czuczka in Berlin. Editors: Alan Crawford, James Hertling

To contact the reporters on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net;

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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