By Rainer Buergin and Brian Parkin - Jul 19, 2012 12:34 PM GMT+0400
German lawmakers are set to ratify the government’s participation in the euro-area bailout of Spanish banks after Finance Minister Wolfgang Schaeuble gave assurances that Spain would remain liable for the aid.
Schaeuble briefed members of the lower house Budget Committee on the rescue in Berlin late yesterday, giving him an opportunity to reiterate his stance that there will be no direct help for banks from the permanent euro-area rescue fund without changes to its rules and to German law. It’s “absurd” to think that “direct bank funding without sovereign liability” is up for debate, he told the Rheinische Post newspaper two days ago.
Lawmakers are due to vote in a special session of the lower house today after the Finance Ministry asked parliament in a July 16 letter to support recapitalizations of as much as 100 billion euros ($123 billion). The money would come from the temporary backstop, the European Financial Stability Facility, and then transfer to the future European Stability Mechanism.
Schaeuble will open the debate at 2 p.m. in Berlin. While Chancellor Angela Merkel’s coalition has a majority in the lower house allowing her to push through legislation, dissenters in her ruling Christian Democratic bloc and among her Free Democratic allies may whittle down the margin in favor.
Thomas Silberhorn, European policy spokesman in parliament for Merkel’s Bavarian Christian Social Union allies, said in an interview that he and other CSU lawmakers “are not fully convinced” that legal clauses in the transition from the EFSF to the permanent fund won’t “allow the Spanish government to escape liability.” He said he wasn’t sure he’d back the bill.
Opposition Backing
Even so, the main opposition Social Democratic Party and Greens indicated they would back the measure, bolstering the majority in favor of aiding Spain.
“From the signals I’m getting, I’m optimistic” that parliament will vote in favor of Spain’s bank rescue, Merkel told reporters yesterday. The chancellor will get “the majority she needs,” Steffen Seibert, her spokesman, said July 13.
Merkel’s coalition controls 330 of the 620 seats in the lower house of parliament, the Bundestag. She needs 311 votes for the so-called chancellor’s majority she failed to secure twice this year, when parliament backed the second aid program for Greece and when it approved the ESM. Both measures passed with support from the opposition.
Merkel hinted this week that she will seek a third term at national elections due in the fall of 2013, saying that the euro crisis will be a dominant theme. She meanwhile saw her approval rating for managing the crisis rise to 63 percent from 60 percent two months ago, ZDF public television said July 13, citing a poll it commissioned from FG Wahlen.
Party Polls
Her CDU/CSU bloc leads the Social Democrats by 36 percent to 26 percent, a weekly Forsa poll for Stern magazine showed yesterday. That compares with the 33.8 percent her bloc won at the last election in 2009, when the SPD took 23 percent. Even so, neither her alliance with the Free Democrats nor the SPD and Greens would win enough votes for a majority if elections were held now, the poll showed.
Helping Spain’s banks provides a good chance to regain investor confidence in the euro region and there’s still sufficient funding left in the EFSF, Schaeuble told Budget Committee members yesterday, according to the HIB parliamentary newsletter. “Spain doesn’t need a full program,” the newsletter cited Schaeuble as saying.
‘Vicious Circle’
The Greens have “always maintained that we have to break the vicious circle by helping banks in a direct way,” Priska Hinz, the Green party’s budget spokeswoman, said yesterday. At the same time, the Greens’ backing for the bill requires assurances that the German parliament “will be regularly apprised of the progress of restructuring Spanish banks and that we are involved in that process” of granting aid.
Schaeuble offered assurances in the Rheinische Post, saying only “once European banking supervision is discussed, decided, operational and functioning -- at that point a decision can be taken that would enable banks to be directly recapitalized from the rescue fund” bypassing the sovereign.
The coalition parties “should get a clear and wide” majority, said Norbert Barthle, CDU/CSU budget spokesman, adding that he hoped there wouldn’t be “too many dissenters in the coalition that may take advantage of the SPD’s likely support to air misgivings about the aid and reject the bill.” Coalition lawmakers “can have no doubt on the liability issue, as the rules of the EFSF and ESM are clear.”
To contact the reporters on this story: Rainer Buergin in Berlin at rbuergin1@bloomberg.net;
Brian Parkin in Berlin at bparkin@bloomberg.net
To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net
