Brussels, 21/06/2012 (Agence Europe) - Angela's Merkel's government in Germany has managed to convince the main opposition parties to vote by the two-thirds majority required to ratify the fiscal compact and the treaty establishing the European Stability Mechanism (ESM), the eurozone bailout fund that will have lending capacity of €500 billion.
Political parties needed to agree on the legislation in time for ratification before the European summit on Friday 29 June because the government promised to endorse measures to stimulate growth, like an increase in the European Investment Bank's capital. It backed the idea of introducing project bonds to finance big EU infrastructure projects. It also went along with the suggestions from the opposition Greens and Social Democrats for a financial transaction tax (FTT). The idea of a redemption fund to pool excess eurozone debt, an idea rejected by the Bundesbank (see EUROPE 10637), was not taken up by the German MPs.
Rather than pooling excess sovereign debt, the German opposition wants an FTT to be introduced, which is possible if there is sufficient good will, said the head of the parliamentary SPD, Frank-Walter Steinmeier. The enhanced cooperation mechanism could be used if the ECOFIN Council in Luxembourg on Friday reveals that not all EU27 member states back the idea (see EUROPE 10638). The fiscal compact, including the introduction of a golden rule to restrict budget spending, will come into force in January 2013 if at least 12 eurozone countries have ratified it by then. Some eight have done so at present. (EL/transl.fl)