Bundestag approves aid to spain – without majority of chancellor

Bundestag approves aid to spain - without majority of chancellor

The CDU/CSU and FDP reacted calmly, while the SPD spoke of a defeat for chancellor angela merkel. The CDU leader and FDP leader philipp rosler had previously assured that such a result would have no impact on the coalition.

In total, loans of up to 100 billion euros are earmarked for the spanish banks. The bailout is the first in which money from the euro’s front-loaded bailout fund, the EFSF, is to be made available to support banks, and the conditions attached to it affect only the financial sector. Not only members of the opposition, but also members of the union and the free democratic party (FDP) had voiced considerable concerns about this.

In the vote, the government camp did achieve its own majority. With 301 yes votes, however, black-yellow once again missed the chancellor’s majority. The coalition needed 311 votes in favor – one vote more than half of the 620 members of parliament. Merkel had already broken this psychologically important barrier with the decision on the second aid package for greece in february and the three roll-call votes on the euro bailout fund ESM at the end of june.

SPD faction leader thomas oppermann said this was proof that merkel no longer had the necessary support. "The coalition still has important decisions to make. But this chancellor is already incapable of action," he said.

The parliamentarians had returned from their summer recess for the special session; of the total of 330 members of the black-yellow coalition, five were absent with excuses. A total of 473 of the 583 deputies present were in favor of the aid, including a majority of representatives of the SPD and the greens. 97 were against, 13 abstained. The left rejected the bank bailouts unanimously.

As early as this friday, the euro finance ministers plan to sign the agreement between the EU and euro partners, with spain following on 24 june. July. Germany is liable for the loans of up to 100 billion euros with almost 30 billion euros. Condition for aid is that spain restructures banking sector, which is suffering from the consequences of a burst real estate bubble.

Before the vote, finance minister wolfgang schauble (CDU) reaffirmed in a government statement that the aid would be subject to strict conditions and that the state would stand by it without compromise: "spain is submitting the application. Spain gets the money for bank recapitalization. And spain as a state is liable for the aid from the EFSF."Without a solution to the spanish banking crisis, the financial stability of the entire eurozone would be in danger.

The euro fell during the afternoon session of the bundestag to a daily low of 1.2229 U.S. Dollars, after being one cent higher in the morning. Schauble’s bank bailout talks had put a strain on community preservation, he said from the trading floor.

In the bundestag, the SPD criticized above all the crisis management of the federal government. Parliamentary group leader frank-walter steinmeier accused the chancellor of overstepping previously agreed-upon red lines at ever shorter intervals. "Those who distance themselves more and more from reality will eventually no longer be believed by the people."Grunen faction leader jurgen trittin demanded stricter conditions for banks throughout the euro area.

The left rejected the bailout in general. Faction vice-president sahra wagenknecht criticized that taxpayers and municipalities were being plundered in order to "squander" gigantic sums on the banks. CDU member manfred kolbe and FDP financial expert frank schaffler justified their no vote by saying that there was no reason why european taxpayers should foot the bill for the mismanagement of spanish banks.

Meanwhile, the spanish parliament approved the latest austerity package of the conservative government of prime minister mariano rajoy, worth up to 65 billion euros. It includes a sharp increase in VAT, a reduction in unemployment benefits and the abolition of christmas bonuses for public employees. The majority of the new austerity measures are in line with the demands of the EU commission.