Germany starts fast-track legislative process to bail out Greece
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Germany on Monday started a fast-track legislative process to provide emergency bailout to Greece with Chancellor Angela Merkel's cabinet approving a draft law that would free up some 22.4 billion euros (30 billion U.S. dollars) to debt-ridden Greece.
The aid was part of an overall three-year aid package of 110 billion euros (146 billion dollars) agreed on by the Greek government, the European Commission, the European Central Bank ( ECB) and the International Monetary Fund (IMF) on Sunday.
German Chancellor Merkel told reporters after the cabinet meeting that the rescue package was of enormous political and economic significance. "We are not only helping Greece, but also stabilizing the euro as a whole and thus helping people in Germany. A stable European currency is an extremely valuable asset."
According to Merkel, Germany will contribute 8.4 billion euros to the Greek bailout this year, followed by a total of 14 billion euros in 2011 and 2012. The money will come in the form of loans by the government-owned development bank KfW, which are guaranteed by the German government.
With an eye on a political reluctance at home to bail out Greece and possibly other debt-ridden euro nations, Merkel reiterated her call for tougher European rules to prevent future crises.
She said that she would make proposals to the EU Commission on how to better implement the eurozone Stability and Growth Pact as well as "possible treaty changes to enable an adequate crisis management in the future."
"It is the task of our government to flesh out this stability pact in such a way as to ensure that it cannot be undermined and that it is strictly adhered to," Merkel said.
She also called for the establishment of a European rating agency in order to make European financial markets "more sustainable and reactive."
But before making her case at the EU level, the German leader will have to convince lawmakers and voters to back the Greek aid package which needs to pass both houses of the German parliament by Friday.
Merkel said that she will present the draft law with a government statement to the lower house of parliament, the Bundestag, on Wednesday as well as in a series of media interviews addressing to the general public.
German Finance Minister Wolfgang Schaeuble on Monday rejected accusations that the German government has been footdragging on bailing out Greece, saying that a thorough discussion is worth while.
He said that providing the huge amount of loans does carry a risk but by doing so "Germany is meeting its responsibility."
Sigmar Gabriel, leader of the main opposition Social Democrats (SPD), however, left open the question of whether his party will endorse the legislation, saying the SPD will agree only if the ruling coalition makes a firm commitment to striving for comprehensive regulations of the financial market in 2010.
German media analyses said that a majority of Merkel's ruling coalition will be enough to push through the draft law through the Bundestag, but the SPD wants to grill the ruling coalition for a few days before a crucial regional election on May 9 in the most populous and economically most powerful German state of North Rhine-Westphalia.
Apart from political controversies, Merkel's government will also be confronted with a constitutional challenge against the Greek aid package this week.
German constitutional lawyer Karl Albrecht Schachtschneider told the Berliner daily "Tagesspiegel" that he and three other lawyers and economists would ask the German constitutional court in Karlsruhe to intervene and prevent the government from releasing the loans to Greece.
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