Merkel allies warily back Greece deal as parliament vote is set
Chancellor Angela Merkel’s allies began selling the Greek bailout deal to German lawmakers, who set their approval vote for Wednesday with Greece facing a debt payment deadline the next day.
After euro-area finance ministers backed the 86 billion- euro ($96 billion) package, Merkel tweaked her schedule in a bid to lobby lawmakers and limit a revolt against aid to Greece before the vote in the Bundestag, or lower house. Two senior lawmakers in her Christian Democratic Union endorsed the deal Saturday, saying it reflects Germany’s need to reach a compromise with its 18 euro-area partners.
“This is what’s currently achievable in Europe,” lawmakers Ralph Brinkhaus and Eckhardt Rehberg said in a joint statement. Greece “has cooperated” and accepted conditions important to Germany, making the aid accord “justifiable,” they said.
Approval by German lawmakers is needed to unlock Greece’s three-year bailout, which includes immediate funds to cover looming bills such as a 3.2 billion-euro payment to the European Central Bank due Thursday. While Merkel’s coalition has consistently backed bailouts during Europe’s debt crisis, 60 lawmakers in her 311-member caucus voted against even holding talks on further aid to Greece last month.
Refugee crisis
Europe’s refugee crisis is among the arguments in favor of giving Greece another financial lifeline, German Deputy Finance Minister Jens Spahn said Saturday in a text message.
The terms of the agreement reached Friday in Brussels represent “enormous progress,” and the International Monetary Fund has “made it remarkably clear” that it will join in a third bailout in the fall, Spahn said.
Merkel moved up a trip to the Expo 2015 fair in Milan by 24 hours to Monday so she can lobby her caucus Tuesday. She’s expected to address parliament on Wednesday immediately before lawmakers vote on German participation in the bailout.
In a statement after their meeting, the euro-region finance ministers said 26 billion euros will be made available in the first disbursement, including 10 billion euros for a fund to recapitalize Greek banks.
Debt haircut?
While ministers rejected applying a haircut, or reduction of principal, to Greek debt, they will consider longer repayment periods, though this is conditional on Greece’s government meeting the conditions of the bailout.
“Euro membership isn’t unconditional, it requires major efforts from Greece,” German Finance Minister Wolfgang Schaeuble said after the talks. “Despite all the difficulties, all of us in the Eurogroup agreed that we wanted to seize this opportunity.”
As Greek Prime Minister Alexis Tsipras awaits the new cash injection for his ailing economy and crippled banks, he’s facing political pressure at home. Tsipras has suffered multiple defections from his Syriza-led coalition over the bailout terms, and only won parliament’s approval for the reforms with opposition support. He may seek a confidence vote later this month, which could trigger early elections.
[Bloomberg]
