Germany’s Govt And Opposition Nearing Deal On Fiscal Compact

Author: Market News International | Category: News

BERLIN (MNI) – German Chancellor Angela Merkel’s CDU/CSU-FDP
coalition government and the main opposition parties signaled on
Thursday that they are aiming for ratification of the EU fiscal compact
before the summer break.

Speaking after a meeting with Merkel and all party leaders, the
head of the main opposition party, the center-left SPD, Sigmar Gabriel,
said the government “has given up its resistance” to a European growth
pact along side the fiscal compact.

The opposition has said it will vote the fiscal compact only if it
is accompanied by a growth pact at the European level.

The parliamentary leader of the Greens party, Juergen Trittin,
cautioned, though, that there were still some obstacles to overcome.

Talks between the government and the opposition are to be continued
on June 13.

Since ratification of the fiscal compact in Germany requires a
two-thirds majority in the Bundestag, the lower house, and the
Bundesrat, the upper house representing the 16 states, the government
needs support from the opposition.

Finance Minister Wolfgang Schaeuble reaffirmed earlier on Thursday
that the government wants to ratify the fiscal compact and the permanent
bailout fund European Stability Mechanism (ESM) together. The ESM bill
needs to be passed next month at the latest because the fund is to
become operative in July.

Schaeuble said at a press conference here that he was “confident
that we will get the necessary majority” in both houses of parliament.

Norbert Walter-Borjans, SPD finance minister of the state of North
Rhine-Westphalia, said at the same press conference he was “skeptical”
that an agreement with the regional states in the upper house could be
reached by the summer break.

Arguing that the fiscal compact sets tougher deficit rules than
Germany’s “debt-brake” law, Walter-Borjans demanded that the federal
government guarantee that it will come up for any sanction payments if
the deficit rules of the fiscal compact are violated. He said the risk
that this might happen is not small. Moreover, he demanded that the
federal government agree to tax hikes in order to improve the revenue
situation of the states.

–Berlin bureau: +49-30-22 62 05 80; email:

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