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Updated: May 21, 2010 17:14 IST

German parliament approves 750 billion eurozone aid bill

DPA
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German Chancellor Angela Merkel addresses parliament about the 750 billion euro rescue package in Berlin. Photo: AP.
German Chancellor Angela Merkel addresses parliament about the 750 billion euro rescue package in Berlin. Photo: AP.

The German parliament voted on Friday to approve its share of a 750—billion—euro (930—billion—dollar) eurozone rescue system aimed at bailing out stricken euro member states.

Chancellor Angela Merkel’s centre—right coalition carried the vote, which passed with 319 votes in favour, 73 against and 195 abstentions.

After a heated parliamentary debate, Ms. Merkel was unable to win cross—party support for the measures, which only just scraped past the minimum 312 votes needed to get through parliament.

The bill was due to be approved later in the day by the upper house of parliament, where Merkel’s centre—right coalition also holds the majority.

As the largest eurozone economy, Germany is to contribute up to 148 billion euros in credit guarantees, if the full rescue package is ever implemented in any of the 16 countries that have adopted the EU’s single currency.

Ahead of the vote, legislators intensely debated the need for more stringent financial market regulations, to work in conjunction with the bailout package.

The Social Democrats (SPD), the largest opposition party, abstained from the vote to show their criticism of the bill’s lack of additional measures to regulate financial markets.

Last week Ms. Merkel adopted SPD demands for an international financial transaction tax, a move seen to placate the opposition in the hope of winning their support for the bill’s passage through parliament.

However, the idea was given a clear rebuff when Ms. Merkel addressed officials from G20 nations during a financial market reform conference the previous day in Berlin.

“The question whether this will go global is being judged very sceptically by many, ”Finance Minister Wolfgang Schaeuble told parliament.

Legislators also criticized the fact that few details had been agreed about the way the system of eurozone credits guarantees would work in practice.

Specifically, the legal framework for a so—called Special Purpose Vehicle, which is to contain 440 billion euros of eurozone member contributions, has not yet been drawn up.

“We do not yet know the contractual fundamentals (of the rescue package). This is an unreasonable demand for every representative in this house,” said the SPD’s parliamentary whip Thomas Oppermann.

The rest of the aid package is made up of 250 billion euros from the International Monetary Fund (IMF) and 60 billion euros from the European Union’s budget.

The vote came just two weeks after Germany approved its 22.4—billion—euro share of a huge eurozone/IMF Greek aid package.

Germany came under fire earlier this week for unilaterally banning the practice of naked short selling on financial markets, which spooked markets and brought shares tumbling.

Meanwhile an EU task force of finance ministers and economic experts were considering German proposals to prevent a repeat of the Greek crisis, including greater national oversight of other EU members’ budgets, at a meeting in Brussels.


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