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The Globe and Mail

Merkel risks Bundestag revolt on crisis plan vote

German Chancellor Angela Merkel speaks during a Rio+20 International Protection of the Sea conference in Berlin, October 24, 2011.


Angela Merkel, the German chancellor, will take a calculated risk on Wednesday by giving the whole German parliament a vote on the latest euro zone crisis measures, before she returns to Brussels to sign off on the deal.

Members of the Bundestag had demanded the right to scrutinize the package, including measures to "leverage" the €440-billion ($614-billion) European financial stability facility – the euro zone's emergency rescue fund– before giving Ms. Merkel a green light to agree anything at the second euro zone summit in four days.

Now Ms. Merkel's own party has decided to put the package to the full parliamentary chamber – risking once again a rebellion by a hostile minority in its own ranks – and not simply leave it to be approved behind closed doors by the budget committee, where she has a safe majority.

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The volte-face was agreed by the party leadership in Berlin on Monday, only three days after the government rejected a similar proposal by the opposition Social Democrats and Green party.

It suggests that Ms. Merkel is confident she can win her "own majority" in the parliament, and not rely on opposition votes to get a negotiating mandate in Brussels, which would be a severe blow to the credibility of her ruling centre-right coalition. But in the last such vote in September – on extending the powers of the EFSF – 15 government supporters rebelled, and they are likely to do so again.

The move could also strengthen the chancellor's hand in Brussels, where she can argue that her room for manoeuvre is severely constrained by the need to win backing in the Bundestag.

"On such important questions, it is good if the parliament gives the chancellor broad backing for her negotiations," said Volker Kauder, parliamentary leader of the CDU, when he announced the move.

Full details of the package have yet to be given to the German parliamentarians because negotiations are still continuing on precise details of the plans to "leverage" the euro zone rescue fund. Talks are also continuing between the euro zone governments and leading international banks on increasing the private creditors' contribution to a new debt relief package for Greece.

Ms. Merkel conceded the new powers to the Bundestag in September as part of the deal to win the first vote on the EFSF. As a result, the 17 eurozone countries were forced to hold two summits – on Sunday and now on Wednesday – in order to give the chancellor time to get the green light from Berlin.

Throughout the negotiations she has insisted that Germany's €211-billion financial guarantee for the EFSF would not be increased and nor would any leveraging of the fund include using the resources of the European Central Bank – a proposal pushed strongly by Nicolas Sarkozy, French president. On Sunday, Mr. Sarkozy appeared to drop that demand. Two models are now under discussion, one for the EFSF to insure bond buyers against losses, the other to create a new fund with EFSF core capital to attract outside investors to participate.

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