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German parliament approves Cyprus bailout package


Text by News Wires

Latest update : 2013-04-18

The German Parliament has approved a 10-billion-euro rescue package for Cyprus by a wide margin of 486 for and 103 against. German Finance Minister Wolfgang Schaeuble stressed the need for further fiscal discipline for sustainable growth.

The German parliament approved an international bailout package for stricken eurozone member Cyprus by a large majority on Thursday.

A final tally by the Bundestag lower house showed 486 deputies voted for the measure, with 103 against and 11 abstentions.

MPs also overwhelmingly backed a deal by eurozone finance ministers giving Ireland and Portugal an extra seven years to repay aid they have received to allow them to consolidate progress.

Eurozone finance ministers on Friday formally approved new terms for the Cyprus debt rescue that will cost far more than first thought -- 23 billion euros ($30 billion) rather than 17 billion euros.

Eurozone partners and the International Monetary Fund are to provide 10 billion euros of this amount, while the Cypriot government will have to find the rest.

Germany will kick in about one-third of the international assistance.

The debt rescue involves a radical restructuring of Cyprus's bloated banking sector, with an economy heavily dependent on financial services now expected to shrink by up to 12.5 percent over the next two years.

Finance Minister Wolfgang Schaeuble had urged MPs to back the Cyprus rescue, citing the gradual recovery of other stricken eurozone members as evidence of the aid-for-reforms strategy's effectiveness.

Speaking to the Bundestag, he said that countries such as Portugal and Ireland had shown that tough budget cutting coupled with international assistance could save a debt-mired country.

"Both have undertaken enormous efforts, are fulfilling the requirements of their (rescue) programmes and are on the right track," he said.

Schaeuble also noted substantial progress made in the past three years in taming the eurozone crisis, pointing to a hike in exports from southern European countries as well as a sharp drop in public deficits.

Striking a conciliatory tone, the usually tough-talking Schaeuble noted that Germany's preaching of austerity in Europe sometimes lacked compassion for the sacrifices made by the people of crisis-battered countries.

"In our country in particular where the euro crisis is not felt in everyday life we must issue a reminder that the people in Greece, Portugal and Cyprus are going through tough times," he said.

But he stressed there was "no other way" than fiscal discipline to achieve sustainable long-term stability and growth.

"For a strong exporting country like Germany, a stable common European currency is an essential foundation for growth, jobs and prosperity," he said in a statement welcoming the passage of the measures.

Polls show that Germans strongly back the crisis-fighting strategies of Chancellor Angela Merkel and her fellow conservative Schaeuble, with five months to go until a general election.

Two of the three opposition parties in parliament, the Social Democrats (SPD) and the Greens, also lent their support in Thursday's vote as they had on previous bailouts for Greece, Ireland, Portugal and Spanish banks.

But SPD parliamentary group leader Frank-Walter Steinmeier said the vote should not be seen as a stamp of approval for the centre-right government's crisis management.

He accused Schaeuble of "amateurish" moves on Cyprus in particular, referring to an initial clause requiring even small bank depositors to stump up for the bailout -- a stipulation that was later scrapped after mass outrage.



Date created : 2013-04-18

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