Bloomberg News

Merkel’s Coalition to Win Majority for Enlarged EFSF in Vote

October 25, 2011

(Updates with comments from coalition lawmakers from second paragraph. See {EXT4 <GO>} for more on the debt crisis.)

Oct. 25 (Bloomberg) -- German Chancellor Angela Merkel is set to win majority support for a planned increase in the size of the euro rescue fund in a parliamentary vote tomorrow, lawmakers said.

“It’s clear we’ll get our own majority,” Economy Minister Philipp Roesler, who heads Merkel’s Free Democratic Party coalition partner, told reporters in Berlin today. A bigger fund will “calm financial markets and stabilize the euro.”

Merkel is due to address lawmakers in the lower house of parliament tomorrow at about noon before the vote. At stake are plans to leverage the 440 billion-euro ($613 billion) European Financial Stability Facility as part of a package of measures to fight the two-year debt crisis that will be discussed by European leaders in Brussels later the same day.

While the Free Democrats have flirted with an anti-bailout stance as their support has tumbled during the crisis, the party was swayed by the proposals to be put to lawmakers after European leaders ruled out tapping the European Central Bank’s balance sheet to bolster the fund, said Christian Lindner, the FDP general secretary.

“The instruments are acceptable because the ECB won’t be turned into a money-printing machine, the EFSF won’t be given a bank license and the guarantees will remain capped at 211 billion euros,” Lindner told reporters.

Merkel’s Majority

Merkel’s bloc has 330 seats in the 620-member lower house, the Bundestag, allowing her to pass legislation with a simple majority of 311 votes with as many as 19 coalition dissenters.

“We need a simple coalition majority,” Klaus-Peter Flosbach, the finance-policy spokesman of Merkel’s Christian Democratic bloc in parliament, said in an e-mailed statement. “I have no doubt that we’ll achieve that.”

The Bundestag won new powers over budgetary matters last month after complaints by coalition lawmakers that they were being steamrolled into accepting decisions made in Brussels affecting the German budget.

While tomorrow’s vote will be the first time those powers are exercised, it echoes a Sept. 29 ballot on enhancements to the EFSF agreed by European leaders at a July summit that failed to stop the contagion from threatening Italy and Spain. Merkel won that vote by 523 votes in favor to 85 against after granting the Bundestag a greater say in the euro decision-making process.

‘New Territory’

“We’re all in new territory” as regards the parliamentary vote, Merkel told reporters today.

The decision in Berlin comes as European Union leaders race to reach an agreement on recapitalizing banks and providing debt relief to Greece as well as boosting the region’s rescue fund.

FDP lawmaker Otto Fricke, who heads the parliament’s budget committee, said that he expected German lawmakers tomorrow to “send a strong signal” to stabilize the euro.

By involving private investors, the rescue fund “will gain sufficient firepower and will hold responsible the countries concerned for taking comprehensive measures of budget stabilization and fiscal recovery,” he said in e-mail comments.

Wolfgang Bosbach, the chairman of the parliament’s interior-affairs committee from Merkel’s CDU, said that he’ll vote against enlarging the rescue fund because such a course would “just push back the problems to our children.”

Each time the coalition parties have been asked to back measures to fight the debt crisis, they’ve been told that “when you vote for this, we will have the problem under control,” Bosbach said in an interview with broadcaster N-TV today. “But the situation in Athens is no better than it was a year ago.”

Bosbach, who voted against the enhanced EFSF last month, said that Merkel’s coalition will still achieve a majority needed to pass the legislation.

--With assistance from Patrick Donahue in Berlin. Editors: Alan Crawford, James Hertling

To contact the reporter on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net Stefan Nicola in Berlin at snicola2@bloomberg.net

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


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