The Biggest Poker Game Ever Will the European Debt Package Really Work?

Germany's cabinet has passed a draft law to provide for its portion of Europe's 750 billion euro package to prop up the ailing currency. But will the fund work? Experts are warning that the side effects may be difficult to stomach.

Germany's cabinet on Tuesday passed a draft law providing for the German portion of a massive European package to stabilize the euro.

Germany's cabinet on Tuesday passed a draft law providing for the German portion of a massive European package to stabilize the euro.

By Bahador Saberi and

"The biggest 'all-in' in the history of poker." That is how Henrik Enderlein, an economy professor at the Hertie School of Governance in Berlin, describes the massive €750 billion ($955 billion) package put together by European Union governments on Sunday night in an effort to save the common European currency, the euro, from collapse.

The package, which includes €440 billion in guarantees from euro-zone countries, €60 billion from the European Union budget and a further €250 billion from the International Monetary Fund, is designed to provide liquidity to those European countries that run into difficulties raising money on the financial markets. More immediately, however, EU politicians wanted to clearly demonstrate that they would not let the debt crisis facing Greece, Portugal, Spain and other countries bring down the common currency.

On Tuesday, the German cabinet agreed on a draft law that provides for Germany's €123 billion share of the package. Should other EU countries not be in a position to pay their share, Germany's contribution could rise to as high as €150 billion, the opposition fears. The Bundestag, Germany's parliament, will take a first look at the bill next week. Since money for the fund is already available via the EU, German Chancellor Angela Merkel said on Monday that the law does not need to be rushed as much as the bill providing aid for Greece last week was.

"We are protecting the money of people in Germany," Merkel said.

Still, despite the best efforts of European heads of state and government to put a positive spin on the package and put on a display of unity, plenty of doubts remain. There will be side effects. The structure of Europe's monetary unity has been fundamentally changed, not least by the provision allowing for the European Central Bank to begin buying up member states' debt. The principal mandating that each country is responsible for its own budget would appear to have been jettisoned. Indeed, the package may result in countries' abandoning tough austerity programs in the knowledge that they will be bailed out.

But what does the package really look like? And what are the potential consequences for European monetary union? SPIEGEL ONLINE takes a closer look.


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