Greece debt crisis: German Chancellor Angela Merkel suffers biggest revolt yet, but bailout passes

 

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The Independent Online

The German Chancellor Angela Merkel has suffered her biggest parliamentary rebellion yet, when 63 members of her Christian conservative bloc voted against Greece’s new €86bn (£61bn) bailout.

Though the rescue package still comfortably cleared the Bundestag and the rebellion was smaller than some in Ms Merkel’s party had feared it raises the possibility of stronger resistance down the line for any further financial assistance for Greece. It also represents a blow to the German Chancellor’s authority.

Greece will now receive the funds it needs to meet its liabilities for the next three years, removing the spectre of “Grexit” from financial markets for the time being.

The European Stability Mechanism will release the first tranche of funds to enable Athens to meet a €3.2bn bond repayment due to the European Central Bank on Thursday.

But the International Monetary Fund is pushing hard for debt relief for Greece and senior German politicians have repeatedly rejected the idea – setting up a possible crisis in the coming months

The German parliament voted by 454 to 113 in favour of the deal. Eighteen MPs abstained and 46 stayed away from the vote. In total 63 of Ms Merkel’s 311 strong conservative group voted against and a further three abstained. Strong support from the Social Democrats and the Green party ensured the bill’s passage.

The backing for the bill from the hardline German finance minister Wolfgang Schäuble helped persuade many MPs. Mr Schäuble said it would be “irresponsible” not to give Greece the funds it needs.

“If Greece stands by its obligations and implements the programme in full and with determination, then the Greek economy can grow again. The opportunity is on offer. And whether it is used, only the Greeks will decide” he said.

The Dutch Parliament also voted down a motion to reject the Greek bailout by a margin of 81-52. The country’s prime minister, Mark Rutte, had earlier said a vote for the bailout was unnecessary on the grounds that it is the cabinet, not parliament, that sets policy.

On Tuesday, MPs in Austria, Estonia and Spain backed the bailout.

“No one believes this will truly provide the ultimate solution to the Greek crisis, but a short-term fix is desirable in the face of imminent economic collapse” Joshua Mahony, a market analyst at IG, said.

“Either Greece has a substantial amount of debt written off as recommended by the IMF, or else we will be back to the same situation once this third bailout ends.”

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