German parliament gives strong backing to Greek debt deal

German Chancellor Angela Merkel, left, and German Finance Minister Wolfgang Schaeuble talk during a meeting of the German federal parliament, Bundestag, in Berlin on Friday.

The German parliament overwhelmingly backed on Friday a deal aimed at cutting Greece’s debt, in a vote seen as approval of Chancellor Angela Merkel’s handling of the eurozone crisis before a general election next year.

Of the 620-member lower house of parliament, the Bundestag, 473 voted for the package, which includes providing cash-strapped Greece with the next tranche of aid totalling 43.7 billion euros (56.6 billion dollars). But 100 rejected the plan and 11 abstained.

Defending the package, Ms Merkel’s Finance Minister Wolfgang Schaeuble told the Bundestag, that a Greek bankruptcy would be a major blow to Europe and the world economy.

“No country is benefiting more from being part of the European Union than Germany,” Mr Schaeuble told lawmakers. “A Greek bankruptcy would lead to the break-up of the eurozone.” he said. Friday’s Bundestag vote follows the decision by the nation’s main political parties to support the rescue package.

The decision by members of Merkel’s coalition government as well the opposition Social Democrats (SDP) and Greens to back the aid programme came despite strong criticism by a group of lawmakers.

The package of emergency measures was agreed at a meeting in Brussels this week between eurozone finance ministers and the International Monetary Fund.

Opposition to the package at the Bundestag reflects the widespread scepticism in Germany, which is the biggest contributor to eurozone rescue funds, to injecting more money into Greece.

The plan to cut Greece’s debt burden will lead to a loss of revenue for Germany next year of about 730 million euros (950.14 million dollars).

This is a result of a voluntary bond-buyback scheme that is aimed at lowering the value of outstanding Greek bonds and the move to reduce the interest rate on Greek loans, which are set out in the aid package.

Reflecting the reluctance among some SPD members to sign off on the Greek rescue plan, opposition leader Frank-Walter Steinmeier told lawmakers that the government “had bought time” with the package but that it was not a sustainable solution to the Greek crisis.

In his speech, Mr Steinmeier criticized Ms Merkel’s government for its failure to set out earlier the true state of Greece’s problems.

But he said, “We cannot abandon the Greeks.” Parliaments in other eurozone states, including the Netherlands and Estonia, are also due to consider the rescue plan.