German bailout vote is ‘too little, too late’
Germany’s Bundestag has voted overwhelmingly to boost the scope of the EU’s rescue fund but implicitly capped its firepower at €440bn, leaving it no clearer whether Europe has the means to halt debt contagion to Italy and Spain.
By Ambrose Evans-Pritchard
29 Sep 2011
Chancellor Angela Merkel won her “own majority” for the bill, narrowly averting the collapse of her government, but only after pledging that there was no grand plan committing Germany to vast and unlimited liabilities.
Horst Seehofer, leader of Bavaria’s Social Christians CSU, said his party would go “this far, and no further”, insisting any expansion of the rescue machinery was out of the question. “The financial markets are beginning to ask whether Germans can afford all this help. We must not risk the creditworthiness of the German state,” he said.
Norbert Lammert, the Bundestag’s president, said lawmakers felt they had been “bounced” into backing far-reaching demands and warned that Germany’s legislature would not give up its fiscal sovereignty to any EU body.
Finance minister Wolfgang Schäuble said reports of a secret plot to boost the guarantees of the fund (EFSF) were scurrilous. “It will not be raised. There can be no debate about this. These suspicions are indecent,” he said, acknowledging only that the money will deployed as “efficiently as possible”.
Officials in Berlin say Mr Schäuble has been careful not to rule out use of leverage. The finance ministry has no specific plan to lever the fund but is aware of six or seven options “floating about” – pushed by France and Brussels – that might offer a solution.