Controversial Leveraging Plan: German Parliament Expected To Hold Full Vote on EFSF
The whole German parliament is expected to vote on planned guidelines for the enlarged euro-zone rescue fund on Wednesday, SPIEGEL ONLINE has learned. Initially, only the budget committee had been due to vote, but coalition lawmakers have changed their minds due to huge public interest in the measure.
The German parliament is expected to hold a full vote on Wednesday on proposals to leverage the euro-zone rescue fund, contrary to earlier plans to confine the vote to its budget committee, SPIEGEL ONLINE has learned from sources in Chancellor Angela Merkel's conservative Christian Democratic Union (CDU).
The sources said conservative parliamentary group leader Volker Kauder would propose holding a full vote on Wednesday afternoon, before Merkel flies to Brussels in the evening for a second summit with euro-zone and EU leaders aimed at reaching an agreement to contain the debt crisis and bring stability to the common currency.
During a meeting on Monday afternoon between Merkel, leaders of German political parties and their parliamentary groups -- in which the chancellor is expected to report on the results of Sunday's summit -- Kauder is expected to call for a new vote. Under Kauder's proposal, a vote would take place shortly after Merkel's planned address to parliament at noon on Wednesday, a speech which will cover the primary measures agreed on to strengthen the euro rescue fund.
At issue is the need to boost the impact of the 440 billion rescue fund, or European Financial Stability Facility (EFSF). There is concern that the current size of the (recently expanded) fund isn't sufficient should additional countries, particularly Spain and Italy, be infected with debt contagion. The fund is also designed to indirectly prop up European banks, which could also become expensive if European leaders this week agree to an even greater haircut on Greek debt. Up to 60 percent is currently under consideration.
Increasing the scope of the fund is particularly controversial in Germany where there are mounting fears that the measure could entail even greater risks for German taxpayers.
Kauder was quoted as saying the leveraging had "attained fundamental significance in recent days due to the public debate about it." The parliament planned to take account of public concerns by making an exception and holding a full vote, he said.
German opposition parties had already demanded a full vote on Friday, but Merkel's center-right coalition of conservatives and pro-business Free Democrats had initially rejected the idea.
The need for German parliamentary involvement in the euro rescue efforts -- a requirement set last month by the Federal Constitutional Court -- has led to a delay in EU talks on a new rescue deal.
The news raises the stakes even further for Merkel, who struggled to contain a rebellion in her ranks against the initial expansion of the EFSF in a parliamentary vote on Sept. 29, before the leverage plans took shape. Indeed, one of the strategies she pursued in putting down that rebellion was discounting speculation that the fund would be leveraged.
It is unclear when the proposed guidelines for the EFSF will become available for lawmakers to review -- it is possible that a new version will arrive from Brussels on Monday evening.
Leverage proposals include the EFSF providing partial guarantees of bonds issued by euro-zone states, or creating a special purpose vehicle to attract funds from major emerging countries.
© SPIEGEL ONLINE 2011
All Rights Reserved
Reproduction only allowed with the permission of SPIEGELnet GmbH