German parliament approves aid for Greece

Germany's parliament on Friday overwhelmingly approved billions of euros in international aid for Greece, handing a much-needed financial boost to Athens as it battles against bankruptcy. Deputies voted by 473 to 100 to give the green light to the release of 43.7 billion euros ($56.9 billion) in aid to debt-wracked Greece agreed after torturous talks between eurozone finance ministers. There were 11 abstentions. The result of the vote was never in doubt after the two main opposition parties vowed to support Chancellor Angela Merkel's ruling centre-right coalition, with less than a year until elections. Ahead of the vote, Finance Minister Wolfgang Schaeuble pointed to the significant efforts made by the Greek government to implement reforms demanded in return for the aid and warned of the consequences of letting Athens fall. "Without our support, it would not only be the future of Greece at stake, but also the future of the eurozone as a whole," Schaeuble said. "The potential impact of a Greek default on other eurozone countries and the eurozone would be serious. The consequences are not foreseeable. We cannot start a process that could end in the break-up of the entire eurozone."Although the opposition Social Democrats (SPD) voted largely in favour, political debate has raged over whether German taxpayers will eventually have to accept losses on Berlin's holdings of Greek debt. Many in Germany consider that a so-called haircut -- or writedown of Greek debt holdings -- by public institutions like other eurozone governments and the European Central Bank is inevitable. And opposition politicians have accused Merkel of playing down the need for a haircut on Greece, fearful of the impact on her chances in a federal election expected to take place on September 22. Schaeuble said that speculation on a haircut "sends exactly the wrong incentive" to Greece, arguing that it reduces the pressure on the government in Athens to enact structural economic reforms. But the parliamentary head of the SPD, Frank-Walter Steinmeier, accused members of the governing coalition of being inconsistent and making comments in an "irresponsible way" about Greece's future in the eurozone. "Wait and see how things develop -- that may sometimes have been good for peace in the coalition, but for our image in Europe, for Germany's image in Europe, it was not," he fumed. A haircut for Greece further down the line is inevitable, Steinmeier argued, telling Merkel: "All you have bought is time." Merkel's challenger next year, former finance minister Peer Steinbrueck said ahead of the vote that his opposition Social Democrats would vote in favour "not to support the government but out of political responsibility for Europe." Spiegel newsweekly pointed to the difficulties faced by the SPD, as it battles to define itself and its policies ahead of the federal election. "With less than a year to go before general elections, the centre-left opposition party finds itself struggling to distance itself from Chancellor Angela Merkel on the election season's most important issue: the euro crisis," the magazine said in its online edition. "And that failure could weigh heavily on its chances" in September. Following a series of landmark decisions by the country's top court, Germany's parliament has to vote on any new rescue packages in the eurozone or major changes to existing packages. Finland and the Netherlands are the only two other eurozone countries in which parliamentary consent is needed to unfreeze the funds for Greece. Also included in the package is a debt buy-back scheme, in which Greece is loaned money to repurchase its debt at lower prices on the market.