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German legislators on Thursday overwhelmingly approved expanding the powers of the eurozone bailout fund, a major step toward tackling the sprawling debt crisis, in a vote that also helped strengthen Chancellor Angela Merkel's coalition government.
The measure had been largely expected to pass the lower house of parliament, but a lively debate ahead of the vote reflected how divided Germans remain over their role as Europe's economic power.
Of 611 legislators present, 523 voted in favour, while 85 voted against it. Only three legislators abstained, meaning that Germany in the future will be guaranteeing loans to the bailout fund, the so-called European Financial Stability Facility, or EFSF, of up to €211 billion, rather than €123 billion so far.
German Chancellor Angela Merkel has said approving the beefed-up bailout fund was "of the very, very greatest significance." (Tobias Schwarz/Reuters)
The vote had highlighted tensions in Merkel's centre-right coalition that was strained by threats of dissent from many members who balked at the cost of propping up the eurozone's strugglers. Opposition leaders had said going in that if Merkel's coalition has to rely on their votes, it would be a sign that her strife-prone and increasingly unpopular government is finished.
Yet after a night of intense lobbying, a majority of coalition members — 315 — voted in favour of the measure, enough to have ensured its passage even without opposition support.
"This shows the clear determination of the coalition on this issue," Rainer Bruederle, parliamentary leader of Merkel's junior partner, the Free Democrats, told n-tv broadcaster after the vote.
"We have made an important decision for Europe."
Yet Frank Schaeffler, also of the Free Democrats, argued that bailout measures have worsened Greece's economic situation.
The bailout fund expansion has to be ratified by all 17 eurozone nations to take force. (Paul Hanna/Reuters)
"Despite all arguments, the first bailout did not make the situation for Greece better, but worse," Schaeffler said. "Expanding the fund will make the situation even worse."
The legislators — under close scrutiny from jittery markets — were voting on European leaders' decision in July to increase the effective lending capacity of the fund to €440 billion ($595 billion US) and give it new powers, such as buying the bonds of shaky countries or lending money to governments before they get into a full-blown crisis.
Though Merkel described the euro ahead of the vote as "our common future" and said approving the beefed-up bailout fund was "of the very, very greatest significance," discussions went deep into the night Wednesday, in an attempt to win over dissenting members of her governing coalition.
On Wednesday, Finland voted in favour of expanding the fund's powers despite earlier threats to pull out of a rescue plan for Greece. The fund expansion has to be ratified by all 17 eurozone nations to take force.
Germany's upper house of parliament is expected to pass the measure on Friday.
Meanwhile, Greece's international debt inspectors are due back in Athens to resume their suspended review of the country's reforms and determine whether to recommend the debt-struck nation receives the vital next instalment of bailout loans.
Officials from the International Monetary Fund, European Central Bank and European Commission, known as the troika, were to head back to Greece Thursday. They suspended their review in early September, leaving Athens amid dissatisfaction over missed fiscal targets and delays in implementation of reforms the country must make to qualify for its bailout loans.
The government announced a series of extra austerity measures after the troika left, including pension cuts and extra taxes. Prime Minister George Papandreou is to chair a cabinet meeting to discuss the reforms.
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