Brussels, 29/09/2011 (Agence Europe) - On Thursday 29 September, the German Bundestag approved the plans to increase the EU bailout fund to give it more clout (with effective lending capacity of €440bn) and give the current EFSF greater powers. Angela Merkel was able to win over enough support from Christian-Democrats and Liberals to win the vote by a handful of votes, not needing to call on opposition parties for support. The Left opposition parties rallied round the 21 July decisions a while ago, agreeing to increase the EFSF's powers and effective lending capacity. Once the national ratification process has been completed, the bailout fund will be able to buy up struggling countries' bonds and issue loans to countries not covered by austerity programmes but requiring help to bail out its banks.
During the debate ahead of the vote, several German MEPs urged the German finance ministry to explain whether talks had taken place about any further expansion f the EFSF in the future. Wolfgang Schäuble said that nothing would be hidden or concealed and pointed out that the guidelines (that set out how the EFSF operates) will need to be approved by the German parliament. At the AGMs of the World Bank and the International Monetary Fund in Washington recently, EU Economic and Monetary Affairs Commissioner Olli Rehn said the EFSF could be given more teeth and allowed to use leverage techniques.
The European Commission welcomed the vote in Germany in favour of a stronger European bailout fund, explained a spokesperson for Olli Rehn. Finland ratified the deal yesterday and Slovenia the day before, explained the spokesperson. Thus far, eleven member states have ratified the decisions taken by the 21 July eurozone summit (Germany, Belgium, Spain, Finland, France, Greece, Ireland, Italy, Luxembourg, Portugal and Slovenia). All eyes are now on Slovakia, where the government is facing a fringe of the SaS Liberal party (part of the coalition government) that has been campaigning against any increase in the EFSF. Rehn hopes the entire ratification process can be completed half way through next month.
Economic governance. The day after Barroso's State of the Union speech (see EUROPE 10462), a spokesperson for the Commission president was keen to dispel doubts about whether Barroso's ideas on economic governance matched those expressed by Merkel and Sarkozy. There are no contradictions between the Franco-German idea of regular eurozone summits and Barroso's refusal to create parallel institutions. Along with the holding of regular summits, Berlin and Paris suggest that President of the European Council Herman Van Rompuy should chair the eurozone, as a way of introducing the first elements of a eurozone government, an idea keenly defended by the French. Greeted by applause from MEPs, Barroso defended the Community method and its effectiveness compared with intergovernmentalism, making it clear that the Commission was the EU's economic government. Barroso's spokesperson said that regular eurozone summits would be part of the governance package, but could not replace the Commission's crucial role in governing the eurozone from day to day. (MB/transl.fl)