German SPD Leans Toward Backing Cyprus Aid Deal, Chief Whip Says

German Chancellor Angela Merkel’s Social Democratic opponents are leaning toward voting with the government in favor of aid for Cyprus after bank shareholders and wealthy depositors were made to contribute, a senior party official said.

The German parliament’s finance and budget committees are scheduled to discuss the Cyprus bailout this week, with the lower house due to hold a vote on the package at an as-yet unspecified date. SPD lawmakers will hold an internal vote on the rescue accord on April 16, said Thomas Oppermann, the party’s chief whip.

“The result of the vote is open but there are positive tendencies,” Oppermann said today in an interview at the SPD’s national convention in the Bavarian city of Augsburg. He cited as a reason the package’s inclusion of contributions from the owners and biggest depositors of Cypriot banks.

Even as polls suggest bailout fatigue in Germany less than six months before national elections, lawmakers from Merkel’s Christian Democratic Union have signaled support for the Cyprus package so long as taxpayer-funded loans are limited to the 10 billion euros ($13 billion) agreed.

While external assessors raised the estimate of Cyprus’s total financing needs to 23 billion euros from 17 billion euros, the island’s government has said it plans to close the gap on its own efforts, including by selling gold reserves.

Parliamentary Seats

Merkel’s coalition has 330 members of the 620-seat lower house of parliament, ensuring that it can pass legislation. The SPD controls 146 seats. Merkel failed to muster the symbolic “chancellor’s majority” in a parliamentary vote in November on easing the aid terms for Greece, forcing her to rely on opposition support to pass the measure.

In a Feb. 3 interview published in Der Spiegel magazine, SPD chancellor candidate Peer Steinbrueck set out four conditions for backing aid for Cyprus: winding down some Cypriot banks, measures to combat money laundering, the introduction of a financial transaction tax in Cyprus and a review of the island’s corporate tax rates.

Merkel’s coalition will probably have their own majority in a vote on Cyprus this month, Norbert Barthle, the CDU’s budget spokesman, said in an April 11 interview.

Pending approval by governments and legislatures, Cyprus may gain initial aid of as much as 2 billion euros before May 31, according to the European Stability Mechanism.

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