Bloomberg News

Merkel Allies Hail German Parliament’s Voice in Euro Bank Aid

June 29, 2012

Chancellor Angela Merkel’s allies in Berlin praised the German leader for ensuring parliament’s right to approve any direct aid to troubled euro-region banks and resisting euro bonds at an overnight European Union summit.

“It’s clear that the immediate recapitalization of banks in Spain isn’t possible on the basis of today’s bundle of bills,” Norbert Barthle, the budget spokesman in parliament for Merkel’s Christian Union bloc, said in an e-mailed statement in reference to laws being voted on in both houses of the German parliament today. It would “represent a new aid instrument of the ESM that would have to be backed by the plenary of the German Bundestag.”

Decisions by EU leaders in Brussels won’t affect the vote in parliament on backing the future euro region financial backstop, the European Stability Mechanism, and the fiscal pact on budget discipline, said Barthle. The parliament of Germany, Europe’s biggest economy and biggest paymaster to troubled euro- region governments and banks, is reasserting its role in approving aid in the crisis now in its third year.

Merkel’s Christian Democratic Union general secretary, Hermann Groehe, said the chancellor had fended off demands at the Brussels summit to accept euro bonds.

“The decisive point is that there have been massive attempts in the past days to achieve shared liability,” Groehe said on ZDF television. “The fact that Angela Merkel, supported by other countries, successfully averted that is good for Germany as a stability anchor and good for Europe.”

Spanish Banks

The bills to be passed by both chambers would not allow the ESM to recapitalize Spanish banks directly, Barthle said. The law would have to be amended in such an event to guarantee the German parliament’s right to have a say in decisions, he said.

Barthle rejected a call by an opposition Social Democratic lawmaker to postpone the votes in parliament. He dismissed concerns by SPD budget spokesman Carsten Schneider that the summit results created too many unknowns for lawmakers to allow them to vote today.

An agreement on aid to banks tracked Germany’s view that shared control must precede shared liability, Groehe said. Direct aid to banks will only come after European supervision has been established, he said.

The comments suggest that Merkel will get her party’s backing in the parliamentary votes on the ESM and fiscal pact.

Merkel Speech

Merkel is scheduled to address the lower house of parliament, the Bundestag, at 5 p.m. Berlin time before lawmakers vote on the bills.

Merkel needs two-thirds majorities in the lower house of parliament and the upper house, the Bundesrat, where Germany’s 16 federal states are represented. Her ruling bloc has to rely on the support of the opposition SPD and Greens in both houses.

The summit results “are right for Europe” and will help Europe emerge from its crisis, Torsten Albig, the SPD prime minister in the state of Schleswig-Holstein, said this morning on ZDF television, suggesting the biggest opposition party will back Merkel.

Germany benefits more than any other country from the EU and without “solidarity” with Italy and Spain, Germany will face difficulties, Albig said.

The leaders in Brussels approved a 120 billion-euro ($152 billion) growth-boosting package the SPD and the Greens had said is a precondition for their support in parliament.

Merkel’s CDU and its Bavarian Christian Social Union sister party on June 26 passed the two legislative items in trial votes in Berlin with a broad majority. The ESM was passed by the 237- strong caucus with 11 “no” votes and 1 abstention, while the fiscal pact passed with three “no” votes and 1 abstention.

To contact the reporter 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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