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German lawmakers approve new Greek bailout
Question of the Day
BERLIN — The German parliament approved a second, euro130 billion ($173 billion) loan package for Greece on Monday after Chancellor Angela Merkel warned lawmakers that it would be irresponsible to abandon the country to bankruptcy.
Although the motion was always expected to be easily approved — the final tally Monday was 496-90 with five abstentions — the idea of bailing out Greece has remained very unpopular in Germany, Europe’s biggest economy, among the public and many politicians.
“The road that lies in front of Greece is long and truly not without risk,” Merkel told lawmakers before the vote. “That also goes for the success of the new program — no one can give a 100 percent guarantee of success.”
Earlier Monday, the mass-circulation Bild daily, which has always taken a very hard line on Greece, plastered the word “STOP!” over its front page. Its message to lawmakers was: “Don’t keep on going the wrong way.”
Merkel, however, said it would be irresponsible to risk a Greek bankruptcy.
But she insisted that “the opportunities outweigh the risks of turning away from Greece now — I believe these risks are incalculable and therefore irresponsible.”
The rescue package is Greece’s second in less than two years and also involves private-sector investors accepting total losses of more than 70 percent on the bonds they hold, along with tough new austerity measures.
But more than two years of harsh austerity implemented to secure the rescue funds have left the economy in freefall, with businesses closing in the tens of thousands and unemployment at a record high 21 percent in November.
It isn’t yet clear exactly what Germany’s share of the new bailout will be, and the IMF’s input this time has yet to be determined. But Merkel said “it is indispensable for the German government that the IMF continue to make a significant contribution and provide its experience and expertise.”
Several non-European members of the IMF, such as the U.S., are reluctant to boost the IMF’s resources for troubled eurozone nations, saying the region’s bailout funds should be increased in size first.
The need to strengthen the bailout funds was heightened on Monday, when ratings agency Standard & Poor’s lowered its credit outlook for the current fund, the European Financial Stability Facility, to negative.
It had already downgraded the EFSF in January after key contributors France and Austria were stripped of their top ratings. But S&P noted Germany did not appear ready to make up for the fund’s lost creditworthiness by offering it new support.
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