30 October 2012

FT: Eurozone woes weigh on Merkel's majority

Angela Merkel's centre-right coalition of Christian Democrats and Free Democrats is anxious about the prospect of voting for yet more financial aid for Greece, and for a programme for Spain, which could unleash unlimited bond-buying by the European Central Bank.

Leading parliamentarians have in recent days sounded more sympathetic towards more help for Athens, but almost everyone thinks the politics of eurozone bailouts are becoming more fraught a year ahead of elections.

The Bundestag grapples with the idea of lending more taxpayers’ money to Greece, lawmakers may be asked to back an aid programme for Spain, which to many is tantamount to approving central bank funding of governments. With the opposition Social Democrats and Greens backing eurozone rescue efforts, the chances of the Bundestag blocking measures agreed by EU leaders remain slim. “The [financial] markets will always get the majority they need”, one MP said.

To contain any potential rebellion, the government and the coalition’s parliamentary groups are discussing intensely how to present Greek and Spanish packages – and possibly one for Cyprus – if and when the respective governments apply for them.

Although officially denied by the government, one recurring proposals is to push all  bailouts through the Bundestag in one go. But MPs are resisting this, given the difficulty of combining a Greek package, expected sometime in November, with one for Spain when Berlin remains sceptical about whether Madrid needs it at all.

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