German Opposition May Derail Expansion of European Stability Fund

Bulgaria in EU | August 12, 2011, Friday // 18:58|  views

A file photograph showing French President Nicolas Sarkozy (L) meeting with German Chancellor Angela Merkel (R) in front of the Chancellery in Berlin, Germany, 20 July 2011. EPA/BGNES

Germany's opposition Social Democrats (SPD) are threatening to block the changes to the European Financial Stability Facility (EFSF), if the Bundestag is not informed shortly on their impact on Germany.

The measures are due to be voted on in the German Parliament's lower house (Bundestag) and upper house (Bundesrat) of parliament on September 23, allies of Chancellor Angela Merkel announced later Friday, as cited by DPA.

Expanding the EFSF's mandate is seen as key to calming the current turbulence in European bond markets, which has had knock-on effects on share markets, causing extreme volatility in banking shares in recent days.

German Chancellor Angela Merkel and French President Nicolas Sarkozy said in a joint statement on Sunday that their aim was to implement changes to the ESFS - agreed at an EU summit last month - in their respective countries by late September.

This step was necessary to restore faith in the euro currency and reduce turbulence in the global financial markets, the leaders said.

The agreed changes to the EFSF will introduce more flexibility into the EUR 440 B bailout fund, such as enabling it to directly intervene on the markets by buying up the government bonds of ailing euro zone states.

If Merkel wanted to incorporate changes to the ESFS into German law by late September, as promised, then parliament had to be briefed urgently on the necessary legislative changes and their financial impact, senior SPD figures told the Sueddeutsche Zeitung daily, quoted by DPA

"So far, the Bundestag has no additional information. If that does not change soon, the proposed timeframe is very ambitious," said SPD's budget spokesman Carsten Schneider.

The SPD's deputy parliamentary leader Joachim Poss issued the same warning in a letter to German Finance Minister Wolfgang Schaeuble, the paper reported.

SPD leaders have indicated their broad agreement to the changes - as long as they are consulted in good time on details such as German contributions to loan guarantees.

Merkel requires SPD support in the upper house of parliament, where her center-right coalition no longer has a majority, but could also need opposition votes in the lower house, as her own coalition may not fully back her, DPA says.

Merkel and Sarkozy are due to meet in Paris on Tuesday, to address issues including the governance of EU economic policy and improving euro zone crisis management systems.

We need your support so can keep delivering news and information about Bulgaria! Thank you!

Tags: SPD, Social Democrats, German, Germany, Angela Merkel, EFSF, European Financial Stability Facility, euro zone, Nicolas Sarkozy, Bundestag, Bundesrat


» Related Articles: