German chancellor Angela Merkel can sit back and relax. Yesterday the Bundestag approved, by a wide margin, a reform and liberalization of the European Recovery Fund (EFSF) as set out in terms by Eurogroup managers on July 21 in Brussels. People waited patiently for this "yes" from Germany, whose parliament voted strongly in its favor. 523 were for the fund, and only 85 against it.
Social democrats and the green party both supported the fund. Only the left and a stronghold of rebels either voted against or abstained.
Germany is the eleventh country to ratify aid to Greece, following Belgium, Spain, Slovenia, Finland, France, Greece, Ireland, Italy, Luxembourg and Portugal. The pact will allow improvements to the temporary recovery fund created in 2010 by Eurozone leaders in order to aid struggling member countries with up to 780 billion euros in funds. The actual amount will end up at 440 billion.
Further, the ratification will also grant new capacities and functions, such as granting credit to high-debt countries, financing recapitalization of the banking sector when national measures are not sufficient, and in extreme cases buying shares of state debt from governments and secondary market investors.
Without doubt, this is a calming moment for at-risk countries, which have been waiting anxiously to know whether Germany would contribute up to 221 billion euros to the fund. This amount equals almost a third of the total package. In addition, and against all expectations, Merkel's band of Christian Democrats and Free Democrats pulled together enough votes to ratify the changes on. She did not depend on the Social Democrats and Green Party opposition, both of whom also backed the bill.
This majority was not necessary from a constitutional point of view, but it represents the transcendence of an enormous political divide. Yesterday, Europe at large was strengthened, but so were the inner workings of German parliament.
