Chancellor Angela Merkel's coalition won agreement
from opposition parties Thursday to set a June 29 ratification date
for the eurozone's fiscal compact and a new bailout fund.
But the opposition demanded greater commitments on a proposed
financial transaction tax and a scheme to mutualize eurozone debt as
conditions of their support in the June 29 vote. Both policies are
backed by European center-left parties.
Germany is racing to get the new bailout fund, the European
Stability Mechanism (ESM), into place by July, to aid Spanish banks.
Merkel's other keystone policy, the compact, introduces tougher
budget rules and oversight within the eurozone.
Both bills require a two-thirds majority in parliament, meaning
the chancellor is dependent on opposition support.
Government coalition parties said after all-party talks in Berlin
that they had agreed with the opposition to pass the bills on the
evening of June 29, hours after a June 28-29 summit is to end in
Brussels.
The upper chamber, or Bundesrat, would meet the same evening to
give its assent.
But opposition Social Democrats and Greens, who have already
forced Merkel to back their call for a financial transaction tax
(FTT), denied that the accord on a date meant that passage was
assured.
"It doesn't cover the issues at stake," Social Democratic (SPD)
whip Thomas Oppermann said of the deal struck with ruling parties.
The disagreements in Berlin have added to a sense of crisis this
week, as Greece prepared for a general election on Sunday and Spain
and Italy's borrowing costs soared.
SPD leaders, who met fellow Socialist President Francois Hollande
in Paris on Wednesday, may try to keep open a veto option over the
bills until the last minute.
Senior SPD sources said Merkel would have to "deliver" on the FTT
at the EU summit, or bipartisan assent would fail.
Britain and Sweden are adamantly opposed to the tax but Merkel
appeared this week to agree to opposition demands to launch the tax
on sales on stocks, bonds and derivatives in eurozone nations,
without waiting for the 10 non-euro states in the EU to agree.
Upping the stakes, the SPD and Green Party also demanded a
temporary debt mutualization scheme for the eurozone.
The debt redemption fund would introduce temporary eurobonds to
repay debt over the E.U. limit of 60 percent of gross domestic
product, matched by strict fiscal rules to prevent the buildup of new
debt.
Oppermann said the SPD wanted "movement" on the redemption fund
and assurances to Germany's 16 states, which worry that the fiscal
compact will strain their budgets. Merkel is scheduled to meet
opposition leaders again on June 21.
June 29 is the last regular sitting day of parliament before its
summer recess.
The Social Democrats are to hold a conference on Saturday to
approve the deal with Merkel, while the Green Party is expected to do
so on June 24.
The fiscal compact requires approval by two thirds of the
Bundestag lower chamber as it affects the German constitution.
