German MPs debate fiscal discipline pact, bailout fund
BERLIN GERMAN Finance Minister Wolfgang Schaeuble urged opposition MPs not to scupper two hard-fought pillars of Europe’s crisis fighting strategy during a parliamentary debate on Thursday.
German lawmakers were discussing for the first time the fiscal discipline pact, agreed by 25 of the 27 European Union members, and the long term bailout fund, the ESM.
“We are on the right path,” to overcome the debt crisis, Schaeuble told deputies of the lower house of parliament, the Bundestag.
“We are going to continue on this path in a consistent way,” he said adding that all the measures that had been put in place “follow a concept and make sense.” No vote was due to take place as Chancellor Angela Merkel’s government wants the two measures to go to a vote at the same time at the end of May, although the opposition has questioned this timeframe.
Two of the three opposition parties, the Social Democrats (SPD) and Green party, are expected to back both deals — crucial for the fiscal pact as it will require a change to the German constitution and thus needs a two-thirds majority backing.
But the opposition has made clear its backing is conditional.
It is demanding, in return for its support on the fiscal pact, the introduction, at least in the eurozone, of a financial transaction tax and is calling on Merkel to do more towards its creation.
Schaeuble said Berlin, together with Paris, was pushing most for such a tax.
“We will do everything humanly possible to reach a decision,” he said, a day before European finance ministers discuss the issue at a meeting in Copenhagen.
But he warned “there is no reason to scupper the stability of our joint currency on this matter”.
Opposition members also reproach the fiscal pact for only focusing on budgetary rigour and failing to include provisions for stimulating growth and employment in Europe.
“Mass unemployment is going to destroy Europe,” Juergen Trittin, the Green party’s parliamentary group leader, warned.
The debate on Thursday on the ESM was tentative since its total firepower is still to be decided and will also feature on the agenda in the Danish capital.
Merkel, for the first time, indicated on Monday that Germany was prepared to allow a boost in the eurozone’s firewall.
After fierce international pressure, she said Berlin was open to temporarily combining 500 billion euros ($662 billion) from the permanent ESM rescue fund that comes into effect in July with 200 billion euros already promised to debt-ridden countries.
This would potentially give the eurozone some 700 billion euros in funds to combat any possible future crisis, although some have already deemed it too low.
French Finance Minister Francois Baroin said on Thursday that his country wanted the eurozone’s debt rescue fund raised to around one trillion euros.