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Eurozone stability

May 11, 2010

Chancellor Angela Merkel and her cabinet have given the 'green light' to the eurozone stability package. Germany is expected to contribute at least 123 billion euros to the debt rescue measures.

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A symbolic euro coin over a red backdrop
The eurozone stability package will be worth nearly a trillion dollarsImage: AP

Despite suffering a serious defeat in a state election over the weekend, Chancellor Angela Merkel and her cabinet have given fast-track approval to Germany's share of a 750-billion-euro ($964 billion) eurozone stability package.

The cabinet met Tuesday morning in a special session to approve Germany's contribution, 123 billion euros in loan guarantees, a sum worked out at a meeting of European Union finance ministers in Brussels on Sunday. The German lower house of parliament, the Bundestag, is slated to discuss the issue on Tuesday afternoon.

The opposition criticized the proposal on Monday, with Gregor Gysi, parliamentary group leader of the Left Party, saying the sum could increase by up to 20 percent, since troubled member states would not be expected to contribute to the plan.

Merkel said the rescue plan was necessary to defend the euro. "The member states of the European Union have demonstrated that we have the common political will to do everything for the stability of our common currency," she said in Berlin on Monday.

German Chancellor Angela Merkel, right, and Foreign Minister and Vice Chancellor Guido Westerwelle address the media
The ruling CDU-FDP coalition has lost its majority in the German parliamentImage: AP

More political problems ahead

This latest bailout contribution from Germany, coming on the heels of last week's 22.4-billion-euro ($28.4 billion) aid package for struggling Greece, will likely provide further problems for Merkel's government.

The chancellor has been criticized for her initial reluctance to approve the bailout for Greece ahead of Sunday's election in the western state of North Rhine-Westphalia (NRW), Germany's most populous state.

The issue proved to be central in the NRW campaign. Voters responded by handing the state's ruling alliance of Merkel's conservatives and the pro-business Free Democrats a crushing defeat, ending the majority enjoyed by the ruling coalition in the upper house of parliament, the Bundesrat.

Merkel said Monday that she wanted to approve the latest aid package as soon as possible, but stressed that the cabinet must take time to discuss it properly.

"We don't need to pass the law in two or three days. We can conclude the consultations with a bit more time, quickly but thoroughly, because 60 billion euros ... are already available without any legal measures necessary," she said, referring to the sum available in an emergency European Commission fund.

gb/cmk/AFP/apn/Reuters
Editor: Nancy Isenson

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It was a short lived surge. The euro is trading lower, reversing the gains it had made yesterday on news of the massive rescue fund agreed by European leaders. IT was SUPPOSED to appease the markets' fears of default by Greece and other indebted countries. Here in Germany, the government is meeting today to approve its hefty contribution to the rescue package -- following a pounding Sunday by voters in regional elections in North Rhine Westphalia, who say they're tired of being asked to ante up.
May 11, 201001:43 min
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The German cabinet approves its part of the euro rescue package (11.05.2010)

The German cabinet approves its part of the euro rescue package (11.05.2010)

The German government has approved Berlin's contribution of over 120 Bbillion Euros to a package to help stabilise the single European currency at a special session in Berlin. Chancellor Angela Merkel has come under fire from opposition parties who claim she was too slow in sharing information about the aid package. On Monday Eurozone leaders agreed a rescue deal worth up to 750 billion euros to help euro-member countries in danger of defaulting on debts.
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The euro symbol in front of the European Central Bank in Frankfurt

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