Greeks Face German Parliament Hurdles Even If Vote Is ‘Yes’Rainer Buergin and Brian Parkin
Any future bailout program for Greece faces hurdles in Germany’s lower house of parliament even if Greeks ignore their government’s advice to reject a creditor offer in Sunday’s referendum and vote “yes,” German lawmakers said.
Sentiment has soured among members of Chancellor Angela Merkel’s bloc since Prime Minister Alexis Tsipras took office and adopted a confrontational stance, said the lawmakers. Tsipras, or any possible successor, may struggle to get the Bundestag to even authorize Merkel to start negotiations on a third aid program, they said.
“If there was a new Greek government, the Bundestag would have to formally approve negotiations on a new package,” Christian Democratic Union lawmaker Wolfgang Bosbach, who voted against Merkel’s bailout policies, said by phone. “Then the situation would be like it has always been in the past five years, in which we had extremely bitter experiences, not only with the current Greek government.”
Opposition to giving fresh support to Greece has jumped in Merkel’s parliamentary group. Now there’s even more at stake, with the International Monetary Fund predicting Greece will need at least another 36 billion euros ($40 billion) over the next three years from euro-area states and easier terms on existing debt to keep the nation’s finances sustainable.
In February, when Greece’s bailout was extended for four months, some 108 lawmakers from Merkel’s Christian Democratic Union and Christian Social Union bloc wrote to their constituents telling them that while they’d supported the extension, they wouldn’t back a third aid package.
Another 29 lawmakers from the parties rejected the extension, creating a rebel contingent equal to almost half the strength of the 311-seat caucus. Together with her Social Democratic coalition ally, Merkel could still muster a majority in a vote, though disgruntlement with Greece has been growing among other Bundestag members.
A Greek application for a new credit program would “not be a simple procedure,” German Finance Ministry spokesman Martin Jaeger told reporters on Friday. Depending on the referendum result, Greece would need to apply for a new program within the ESM framework, Jaeger said.
CDU lawmakers like Greek bailout skeptic Klaus-Peter Willsch are adamant that a third aid package won’t get parliament’s support. “I see no way” to do that, said Willsch in a phone call Thursday.
He cited legal hurdles to tap the European Stability Mechanism backstop that aren’t easy to overcome.
“The next hurdle is that ESM resources can only be mobilized when the stability of the euro area as a whole is at risk, and the reactions of financial markets so far really don’t suggest that,” Willsch said.
European stocks declined, heading for their worst week in two months, as investors awaited the referendum result. The Stoxx Europe 600 Index slipped 0.2 percent to 384.61 at 11:22 a.m. in London. With polls showing the Greek vote is too close to call, stocks in Europe have dropped 3.1 percent this week.
A “yes” vote in Sunday’s referendum, followed by a resignation of Tsipras and Finance Minister Yanis Varoufakis and possible new elections in September would mean months of standstill in Greece, hindering legislative action needed to open the door to ESM funds, he said.
The share of Germans who want Greece to stay in the euro dropped to 45 percent in June from 51 percent in February, according to an Infratest dimap poll for ARD public television published Thursday.
“An ESM program would set much higher legal and political hurdles than the previous programs,” Hans-Peter Friedrich, a former Interior Minister and lawmaker representing Merkel’s CSU Bavarian sister party, said by e-mail. “But the best way for Greece would be an exit from the euro.”
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.