Germany approves 3rd Greek bailout despite IMF misgivings

by  

Geoffrey Smith

Feared revolt against Merkel’s leadership fails to materialize.

Greece’s new €86 billion bailout plan won the crucial approval of lawmakers in Germany Wednesday, bringing the new rescue package a big step closer despite the lack of a formal commitment so far from the International Monetary Fund to share the burden.

In Berlin, a total of 454 lawmakers voted in favour of the package — Greece’s third in the last five years — while 113 voted against and 18 abstained. The surge in dissent by members of Chancellor Angela Merkel’s own party, predicted ahead of time by some, failed to materialize.

The size of the ‘No’ vote was slightly smaller than when the Bundestag last month voted to allow Berlin to start negotiating on the third bailout. On that occasion, 119 lawmakers voted ‘No’. However, that number may understate the true degree of dissent as nearly 50 lawmakers didn’t show up due to vacations and, possibly, the wish to avoid the wrath of the party whips if they voted against Merkel’s leadership.

Parliaments in Spain, Austria and Estonia had already approved the package Tuesday. The Netherlands, another country that has been openly hostile to lending Greece more money this year, is still debating the bailout in parliament and is expected to approve it, despite the government coalition only having a one-seat majority.

 

German Finance Minister Wolfgang Schäuble told parliament it would be “irresponsible” not to give Athens another chance after a comprehensive reversal of its earlier policy of opposing the ‘tough love’ of bailout funds in return for reforms.

Schäuble said he was convinced the IMF would join the bailout after its first review, slated for October. He has until then to orchestrate a major reversal of his own policy by granting Greece what the IMF terms “substantial debt relief” to make its debt burden sustainable. The IMF is refusing to join the bailout until the Eurozone takes that step.