German Chancellor Angela Merkel easily won a parliamentary vote on a eurozone rescue package for Spanish banks Thursday despite growing unease in her center-right coalition about the rising cost of Europe’s debt crisis for German taxpayers.
Merkel, who won broad opposition support, managed to secure a simple majority from her own coalition in the Bundestag lower house of parliament, whose members were recalled to rainy Berlin from their summer recess for this one-day session.
With each vote on the eurozone’s debt crisis, concern about Germany’s creeping liabilities has hardened, prompting a growing number of coalition lawmakers to rebel in recent decisions and cramping the government’s room for maneuver in European policy.
The Bundestag backed the bailout by 473 votes, while 97 voted against, including 22 from Merkel’s coalition – fewer than the 26 coalition deputies who rebelled in a more far-reaching vote on the euro zone’s permanent rescue scheme, the European Stability Mechanism, last month.
Appealing to lawmakers to back assistance for Madrid, Finance Minister Wolfgang Schaeuble said the slightest perceived risk of Spanish insolvency could trip up the entire 17-nation eurozone.
“Any problems in the Spanish banking sector are a problem for the financial stability of the eurozone,” he said.
As in June’s ESM vote, Merkel – whose tough stance on the euro crisis has boosted her popularity ahead of a 2013 federal election – fell short of the symbolically important “chancellor majority,” which would have required the support of 311 of her coalition’s 330 MPs in the 620-seat chamber.
The result had largely been a foregone conclusion after the opposition said it would vote in favor.
“Spain is the fourth biggest economy in the eurozone and a couple of its banks need to be stabilized,” Andrea Nahles, deputy party leader for the main opposition Social Democrats (SPD), told Reuters. “If we don’t do it, the country that suffers most is Germany, so it is in Germany’s interests to help Spain.”
But some lawmakers remain concerned that bailing out Spanish banks would not address the real problems in the eurozone and was unfair.
“The big countries in Europe get suitcases of money and the small countries in Europe get a ‘sparkommissar’ (austerity commissar),” said Frank Schaeffler, a backbencher from the Free Democrats (FDP), Merkel’s junior coalition partner.
“That’s got nothing to do with justice,” Schaeffler, an outspoken critic of Germany’s crisis policies, told MPs.
Spain applied for a eurozone bailout late last month as the state of its banking sector, laden with bad debts, deteriorated rapidly. Bankinter posted Thursday first half net profit down more than 77 percent and said it had written down 275.2 million euros against deteriorating real estate assets.
The Spanish government had to offer a euro lifetime record interest rate Thursday to sell five-year bonds, highlighting Madrid’s precarious position and pushing 10-year bond yields back above the 7 percent level seen as unsustainable in the long term.
Germany, Europe’s largest economy, will guarantee almost 30 percent of the new eurozone aid package, whose total value may reach up to 100 billion euros ($123 billion).
Even though the opposition supported the Spanish bank rescue, Social Democrats said it would not allow direct recapitalization of banks by the euro zone’s rescue fund, which some lawmakers worry would be the next step.
“If the majority of us still vote in favor, this is only because in our view too the damage would be catastrophic if Germany denied aid to Spain,” Frank-Walter Steinmeier, parliamentary floor leader of the SPD, said ahead of the vote.
“That also means however that it cannot go on like this. There will be no direct path from the Spanish aid to permanent recapitalization of banks, at least not with us,” he said.
Some lawmakers are concerned that Spanish banks, not the Spanish state, would be liable for the funds once it is transferred to the ESM from the current temporary bailout fund, increasing risks for German and other euro zone taxpayers.
Under the temporary European Financial Stability Facility rescue fund, the vehicle initially used for Spanish aid, the Spanish government will be liable.
The same is true for the ESM, which will take over once it is operational, but that fund is earmarked for major changes, which could eventually see it recapitalizing banks directly, but Schaeuble said the Bundestag would need to vote on such changes before they could take effect.
Schaeuble needed the parliamentary approval in order to be able to commit Germany to the Spanish bailout in a conference call of eurozone finance ministers due Friday.
Merkel is under heavy pressure from some EU partners to move more quickly to stem the crisis but must also heed limits set by German public opinion, parliament and the Constitutional Court, which has told the government to give lawmakers more say.
The court has delayed the entry into force of the ESM, the permanent rescue fund, pending a detailed legal review of whether it violates the German constitution.
The court is due to deliver its verdict on Sept. 12.