EU Pact Faces Hurdle in Germany

Posted by MereNews On March - 4 - 2012

BERLIN—Angela Merkel will need opposition support to pass the European fiscal pact that set out tougher budget rules, raising the pressure on the German chancellor to agree to growth stimulus measures for suffering euro-zone countries.

Spokeswomen for Ms. Merkel’s office and the Finance Ministry confirmed a newspaper report Saturday saying the chancellor needs to secure a two-thirds majority in the lower and upper houses of parliament for the approval of the European fiscal compact.

“The opposition and the upper house of parliament have been included in this consideration at an early stage,” said a spokeswoman for Ms. Merkel’s office. “The fiscal compact will be put to the cabinet soon in order to give the parliament sufficient time for consultations.”

Ms. Merkel will have to rely on support from opposition parties, because she doesn’t have a two-thirds majority in both houses. The two main opposition parties, the Social Democrats and the Greens, have supported Ms. Merkel on laws concerning the financial and euro debt crisis in the past, but set conditions for approving the fiscal compact, such as agreeing to stimulus measures in Europe.

The government believes the introduction of a debt limit in almost all European Union countries, excluding the U.K. and the Czech Republic, that allows other countries to sue a country means Germany will lose sovereign rights to Europe. On Friday, 25 of the 27 EU leaders signed the fiscal compact in Brussels.

Ms. Merkel has lobbied hard for a debt limit on an EU level after Germany enshrined a national debt limit in its constitution that requires the federal government to do virtually without any new debt starting in 2016. But she faced fierce resistance from the U.K and the Czech Republic.

Germany has been criticized by some EU countries for insisting too much on austerity and compromising too little on growth incentives that could help countries with ballooning deficits and a recession partly caused by austerity measures get back on a growth path, such as Greece, Portugal and Spain. Germany’s opposition parties share this view.

The Social Democrats’ parliamentary floor leader, Frank-Walter Steinmeier, said Saturday that his party can’t “picture an approval of the pact without growth-boosting measures.”

Sueddeutsche Zeitung, which had earlier reported the need for the two-thirds majority, cited a lawmaker from the Green opposition party as setting conditions for their support. The party’s budget expert Priska Hinz told the paper that they would request a redemption fund for old debt or a financial transaction tax with proceeds to be used to finance a European growth program.

The report about the need for a two-thirds majority took Michael Meister, financial expert and lawmaker with Ms. Merkel’s Christian Democrats, by surprise. “I don’t share this view. I believe that a simple majority is sufficient,” he said. The fiscal compact is a treaty with other European countries but not the EU as a whole and therefore a simple majority is sufficient, he said.

Write to Andrea Thomas at andrea.thomas@dowjones.com

Article source: http://online.wsj.com/article/SB10001424052970203753704577259503198561514.html?mod=rss_economy

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