Published on The Economist, October 29, 2011.
THE message was unequivocal. On October 26th the Bundestag, the main chamber of Germany’s legislature, voted overwhelmingly to give more firepower to the European Financial Stability Facility (EFSF), which bails out weak euro-zone countries. Two of the three opposition parties joined the government’s motion, which passed with 503 votes in favour and 89 against. The governing coalition—consisting of the Christian Democratic Union (CDU), its Bavarian wing, the Christian Social Union (CSU), and the Free Democratic Party (FDP)—contained a rebellion within its ranks.
Their votes alone would have provided a majority. “Germany, regardless of political party, will protect the work of European unity,” vowed the chancellor, Angela Merkel, just before the vote. When she met her fellow European leaders in Brussels later that day she had the politicians, if not all the voters, behind her.
But their “yes” encased a collection of “nos”: no to any increase in German guarantees for the EFSF beyond the €211 billion ($292 billion) approved in September; no to Eurobonds, which could be issued by any euro member but would be underwritten by all; and no to further financing of stricken countries by the European Central Bank. Collectively these rejections veto a package bold enough to end the crisis. Why are the Germans so stubborn?
The usual answer is that German taxpayers are tight-fisted and that Mrs Merkel is afraid of them. There is truth in that. Three-quarters of Germans opposed the last expansion of the EFSF, which they see as a transfer of money from virtuous countries to feckless ones. Now it is being leveraged to cope with Italy, which has balked at raising its retirement age to 67, a measure Germany reluctantly agreed to in 2007 … //
… Germans see themselves as guarding democracy as well as treasure. In recent rulings the constitutional court has pushed the Bundestag to be more assertive when power or money is transferred to Europe. Legally, the EFSF vote could have taken place in the Bundestag’s budget committee rather than in the chamber, but the CDU wanted to avoid a row over parliamentary prerogative just before a summit. Schemes to raise the debt burden on Germans without Bundestag control, such as Eurobonds, do not pass constitutional muster.
The Bundestag will continue to be a co-summiteer. The budget committee will vet the EFSF’s new arrangements. The next package for Greece will require a full parliamentary vote, as will the creation of the European Stability Mechanism, the successor to the EFSF. Each vote will be a drama, testing the coalition’s stability (and Europe’s). But it is not up to the Bundestag to solve the problem, Germans think. That is the job of Italy’s parlamento. (full text).