German lawmakers approve Greek bailout

German lawmakers approved the latest bailout for Greece on Friday by a large majority despite growing unease about the cost to taxpayers less than a year before federal elections. The outcome of the vote in the lower house was never in doubt but it was a test of Angela Merkel's authority over her centre-right coalition. She did not manage to draw an absolute majority from her own ranks after 23 of her lawmakers rebelled.
But with the main opposition Social Democrats (SPD) and Greens voting in favour with most of Merkel's bloc, the revolt had only symbolic value. Of 584 deputies present in the chamber, 473 voted for the bailout and 100 voted against. The parliamentary floor leader of Merkel's Christian Democrats, Michael Grosse-Broemer, said he was happy with the result of the vote, adding: "Greece must now continue its efforts to reduce its debts and carry out structural reforms." The package, which aims to cut Greece's debt load to 124 percent of national output by 2020, coincides with increased talk among German lawmakers and media that euro zone governments will eventually have to write off much of their Greek debt.
Finance Minister Wolfgang Schaeuble said in the Bundestag debate that such speculation could undermine the Greek government's reform drive. "If we say the debts will be written off (Greece's) willingness to make savings is correspondingly weakened. Such false speculation does not solve the problems," he said. "A Greek bankruptcy could lead to the break-up of the euro zone."
The government acknowledged for the first time this week that the bailout will mean lost federal revenues. All week, German newspapers have reverberated with predictions, including from some coalition lawmakers, that Germany and other euro zone countries will eventually have to write off some of their Greek debt holdings.
Schaeuble said Germany was insisting on strict monitoring of Greece's reforms to ensure it met its fiscal targets, adding that the country's competitiveness was finally improving as a result of the austerity programme. Criticism of the Greek bailouts within Merkel's coalition has softened in recent months after she decided the cost of expelling Greece from the euro zone would be far greater.
The SPD has accused the government of deceiving German voters by insisting that no further writedowns of Greek debt will be necessary, but it is difficult for the strongly pro-euro centre-left party to make political capital out of this issue. Merkel's policy of talking tough on austerity in Greece and other heavily indebted euro zone countries while making the necessary concessions to avert a messy default commands broad support in Germany, where the chancellor is as popular as ever.