German finance minister pushes for bailout support
BERLIN—Germany's finance minister called on lawmakers to approve a permanent European rescue fund and a new budget-discipline pact, saying that they are critical to future stability.
Germany's Parliament is expected to vote in late May on approving the permanent (EURO)500 billion ($667 billion) European Stability Mechanism, or ESM. Chancellor Angela Merkel's government also wants to get the fiscal pact approved before the summer, but it's unclear whether that will happen.
The government needs a two-thirds majority -- and therefore opposition support -- to get the fiscal pact approved.
As Parliament started debating the two measures Thursday, Finance Minister Wolfgang Schaeuble said the fund and pact were "critical" steps toward future stability.
Amid persistent calls for still-bigger firewalls, Schaeuble said European countries must address the fundamental problems that led to the need for rescue funds.
"You can make a firewall as high as you want and it will be no help," he said.
The European Stability Mechanism is to start work in July. Eurozone countries are currently debating to what extent an existing temporary fund can be kept in place alongside it and how large the new facility should be.
Merkel's government must secure at least the support of the biggest opposition party, the center-left Social Democrats, to get the fiscal pact passed. Germany pushed hard for other countries in Europe to accept more budgetary discipline.
The Social Democrats have made clear they want a signal that Germany will introduce a tax on financial transactions, and have raised the possibility of waiting until after the summer to decide on the pact. Ideally, though, they say they want a vote in May or June.
The issue is contentious in the governing coalition, which is divided over whether to agree to launch a tax solely in the 17-country eurozone without the consent of the wider 27-nation European Union.
"Don't assume that approval of the fiscal pact and the ESM will simply fall into your lap," Frank-Walter Steinmeier, the head of the Social Democrats' parliamentary group, told Merkel's conservatives.
Steinmeier recalled that his party helped introduce a deficit-limiting "debt brake" in Germany, but pointed to the need for action to stimulate growth in Europe -- such as increasing the lending capacity of the European Investment Bank and taking measures against youth unemployment.
"You can't get past the fact that, if 27 states in Europe simultaneously do nothing other than save without imagination, no growth will arise," Steinmeier said.