Merkel’s Majority for Cyprus Aid Grows as Greens Signal Support

German Chancellor Angela Merkel’s chances of securing majority backing in parliament for Cyprus’s rescue improved as the opposition Green Party joined the Social Democrats in signaling their support.

The bailout accord brokered this month for Cyprus “in the main” fulfills the demands of the Greens, Priska Hinz, the party’s budget spokeswoman, said in an interview yesterday in Berlin. Thomas Oppermann, chief whip of the main opposition Social Democrats, said in an interview two days ago that there were “positive tendencies” in his party toward the plan.

The prospect of broad support for Cyprus aid in a German parliamentary vote due on April 18 underscores the opposition’s dilemma in countering Merkel’s crisis policy before elections on Sept. 22. With Germany the largest country contributor to euro-area rescues after having committed as much as 211 billion euros ($275 billion), a poll last week showed almost two-thirds of Green and SPD voters approve of Merkel’s crisis handling.

“We want to help Cyprus and see the accord as a means for it to help itself on the road to recovery,” said Hinz. While “there has to be a quid pro quo for aid,” the Greens “are a pro-European party,” she said, indicating that she expected a majority of the 68 Green lawmakers in the 620-seat lower house to vote for the rescue package.

German parliamentary groups will discuss Cyprus at regular meetings in Berlin today before a vote on the bailout in the lower house, the Bundestag. Opposition backing would ensure the package passes easily amid consensus over the need for Cyprus to reduce the banking sector’s role in its economy and cap taxpayer-funded bailout loans to 10 billion euros.

Cyprus Needs

Total aid for Cyprus, including a bail-in, stands at 21 billion euros after varying from 17.5 billion euros to 23 billion euros, Michael Grosse-Broemer, the chief whip of Merkel’s Christian Democratic bloc, told reporters today. The international aid component remains 10 billion euros, he said.

Each of the five parties represented in the Bundestag are due to hold individual straw polls on the package today after they are briefed by Finance Minister Wolfgang Schaeuble. The all-party budget committee scrapped an internal vote that would have indicated the probable outcome of voting in the plenary session until after the parties are briefed later today.

Green lawmakers sought three main conditions in the accord: a monitored plan to tackle money laundering; adoption in Cyprus of a “fairer” corporate tax rate; and the harnessing of large-scale deposits and shareholdings to help pay for the restructuring of Cyprus’s two largest banks, Hinz said.

Merkel should back the efforts of the European Commission and the European Central Bank to speed banking union, a measure that could have ameliorated or even prevented the Cyprus situation, Hinz said.

“If we’d had an effective banking union up and running now, we’d have been better able to anticipate and tackle Cyprus’s problems,” said Hinz.

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