Germany approves second Greek bailout package

German parliament has overwhelmingly approved the second financial bailout package for Greece , but delivered a blow to Chancellor Angela Merkel by denying her for the first time a majority of her centre-right coalition parties in a crucial vote.

The Bundestag, the lower house of parliament, cleared the way for releasing Germany's share of the the 130-billion-euro ($170 billion) rescue package by endorsing on Monday evening a government legislation with 496 votes while 90 deputies voted against and five abstained in the 620-member house.

The deputies also agreed to release 24.4 billion euros left in the first financial rescue package of 110 euros for Greece , which was offered by the European Union and the International Monetary Fund (IMF) in May, 2010.

Parliamentary endorsement of the second bailout for the debt-ridden nation was certain after the two main opposition parties, the Social Democratic Party (SPD) and the Green party had pledged to vote for it even though they disapproved the government's handling of the euro zone debt crisis .

However, several "rebel" MPs in Chancellor Merkel's Christian Democratic Union (CDU) and its coalition partner the Free Democratic Party (FDP), who are critical of the second bailout, carried out their threat to vote against it and robbed the ruling coalition of its own majority.

The legislation received only 304 votes from the coalition camp, seven votes short of 311 votes needed to pass it without the support of the opposition parties. All six previous legislations on euro zone bailout were passed with full backing of the coalition, which has a total of 330 MPs in the Bundestag.

The so-called "chancellor's majority" is not necessary to pass a legislation, but it has a symbolic value as a display of unity within the coalition.

Even though the vote has no direct impact on the stability of Merkel's government, it is bound to increase the strains within the coalition and to make it more vulnerable to attacks from the opposition.

Merkel will find it increasingly difficult to rally the support of all coalition MPs to pass future legislations on euro zone bailout in the Bundestag, especially for an upcoming vote on the euro zone's permanent bailout fund, the European Stability Mechanism (ESM).
Parliamentary manager of the SPD Thomas Oppermann said the outcome of the vote was a "defeat" for the German chancellor because "she lost the backing from her own coalition in one of the central issues in the current legislative period".

Juerger Trittin, parliamentary leader of the Green party said Merkel's coalition is "losing its steam and is on its way out."

The chancellor's party colleagues tried to play down the coalition's failure to secure its own majority in yesterday's vote. The coalition suffered no set back, on the contrary "we supported the chancellor's policies with great unity," parliamentary manager of the CDU Peter Altmaier said.

Germany's share in the second bailout package, which was agreed by the euro zone finance ministers a week ago to avert a bankruptcy of Greece, has not been finalised because the International Monetary Fund (IMF) is yet to announce its contribution to the package.

In a policy statement before the vote, the chancellor appealed to the parliamentarians to support the second bailout and reaffirmed her government's determination to defend the stability of the common currency and to ensure that Greece will remain in the euro zone.

She warned that a disorderly default of Greece will have far-reaching consequences not only for that country but also for the euro zone and for global economies. "The chances of the second programme outweighed its risks even when nobody can give a 100 per cent guarantee that it will succeed," she said.

"If the euro fails, Europe also will fail. If the euro gains, Europe also will gain."

The chancellor urged the Greek government to implement the package of reforms and austerity measures it had agreed to receive the assistance from the EU and the IMF. These measures will open up new perspectives for a better future for the Greek people, she said.

The SPD and the Green party said they voted for the bailout package in spite of their opposition to the government's policies because Europe's future is at stake. The only alternative will be a bankruptcy of Greece, which they want to avoid.

The left party said all of its 76 MPs in the Bundestag voted against the bailout because in their view "only the banks and the hedge funds will benefit from it and not the Greek people, who are already suffering from the tough austerity measures demanded by the EU and the IMF."