Debt: Germany Approves Bailout Fund



Germany Agrees on Bailout

Germany Agrees on Bailout

An overwhelming majority in the German parliament approved the EU’s main bailout fund to have increased powers on Thursday. The vote had been viewed as a test of German Chancellor Angela Merkel’s authority, due to opposition in her coalition government, with Germans against giving more money to bailout Greece and other eurozone members in crisis.

More Votes

The move will be voted on in Germany’s upper house of parliament today and is expected to pass there as well. Bundestag saw 523 votes for the measure, with 85 opposed and three who didn’t vote out of 620. There were nine members absent as well.

The major parties in opposition had said they would support the vote, mainly the SPD and the Greens, so the vote was thought to pass anyway, but the German Chancellor’s own coalition was put on trial. Before the vote, the Christian Democrats (CDU), a member of the coalition and some of their allies had lobbied to attain dissidents to vote against the move. However, 315 members of the coalition voted in favour of the bill, meaning that no reliance on opposition votes was necessary.

If there had been reliance on the opposition, the chancellor would have been doubted in her ability to gain votes on a bailout for Greece and for the European Financial Stability Facility (EFSF) to gain a successor. All 17 members of the euro must vote to ratify the power expansion of the EFSF and increase the bailout guarantees it holds to 440 billion euros, or £383 billion. At present, 10 countries have approved it.

Not Enough Help Anyway

The larger fund is already viewed as inadequate, however, as the crisis in Greece worsens and protestors in Greece stand outside government buildings, blocking them due to increased austerity measures set in place by the “troika”, or European Commission, European Central Bank (ECB), and International Monetary Fund (IMF).

The austerity plans include new taxes and deeper spending cuts, which some citizens feel is creating more of a recession for the struggling economy, but without the bailout loans, Greece will run out of money and the government will collapse. Either way, the outlooks for the country is not good.

 

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