Germany backs Greece’s third bailout

Germany’s lower house backed the programme following a three-hour debate on Wednesday, with 454 in favor, 113 against and 18 abstentions. A breakdown showing the number of dissenters within Chancellor Angela Merkel’s Christian Democrat-led bloc will be released later Wednesday. The euro was up 0.2% as of 12.14pm in Berlin.

The Bundestag approved the bailout after a week of hard lobbying from Merkel and Finance Minister Wolfgang Schaeuble to stem a possible revolt within their caucus. 

Merkel voiced confidence on Tuesday that the International Monetary Fund would help provide loans, while Schaeuble told lawmakers on Wednesday that extending Greece’s financial lifeline was in Europe’s interest. The Social Democrats, Merkel’s coalition partner, and the opposition Greens also supported the measure.

“After the experiences of the past months and years, there are no guarantees that all this will work and doubts are always allowed,” Schaeuble told lawmakers in Berlin. “But given the fact that the Greek Parliament has already adopted a large part of the measures, it would be irresponsible not to seize the chance for a new start in Greece.”

Bailout opponents argue Greece is in a debt trap and that policy makers are bending euro-area rules to hold the currency union together. Bild, Germany’s most-read newspaper, said in an editorial opposing the programme that “it doesn’t offer a rescue – not for Greece, not for the euro and certainly not for Europe” after “five wasted years of rescue policies.”

“Greece won’t make it in the eurozone and we won’t succeed at keeping the eurozone together by force against the will of the people,” said Klaus-Peter Willsch, a lawmaker in Merkel’s Christian Democratic Union who has persistently opposed bailout funding. “If we don’t allow the eurozone to breathe, and that means to allow Greece to exit now with its own currency, then the euro will fail.”

For all the dissent, approval ratings for Schaeuble and Merkel are among the highest for German politicians. Seventy percent of respondents said Schaeuble was doing a good job and 67% said the same about Merkel, according to an Infratest Dimap poll for ARD public television in late July.

Dutch lawmakers will hold a debate this afternoon on the bailout after Germany, Spain Austria and Estonia in the last two days lent their support to the programme. The approvals will clear the way for the European Stability Mechanism, the euro area’s financial backstop, to set in motion the first payout in time for Greece to meet a 3.2-billion-euro payment to the European Central Bank on Thursday.

German backing
Merkel’s coalition has consistently backed financial rescues during Europe’s debt crisis, though dissent has grown with each ballot. Germany has been the biggest country contributor to eurozone bailouts.

In closed-door remarks to her caucus on Tuesday, Merkel said Greece faced a tight web of economic-reform conditions for its bailout, according to a party official, who asked not to be named because the meeting was private. She also told members she has no doubt the IMF will eventually join the aid programme, the official said.

“With this joint decision on Greece, Europe is going down the right road, namely to stay together and find a solution,” Volker Kauder, caucus leader of Merkel’s bloc in Parliament, told lawmakers on Wednesday. “There are also reasons to approve it because we face challenges in Europe that could turn out to be more difficult than what we see as difficult now.” – Bloomberg

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