The German Parliament approves the extension of the European Financial Stability Fund

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The Bundestag , the German parliament, has approved on Thursday with a clear majority the enlargement of the European Financial Stabilization Fund (EFSF), with 523 votes in favor , 85 votes against and 3 abstentions

There were 523 votes in favor, 85 against and 3 abstentions

The results also indicate that the parties of the coalition headed by the federal chancellor, Angela Merkel, managed to provide their own majority in the vote with 315 favorable votes, four more than the minimum to avoid what could have led to a serious government crisis.

The vote had become a covert motion of confidence for Merkel and her government, which would have been compromised if a majority of its own deputies had not supported the approval of the EFSF expansion.

Of the 620 deputies of the Bundestag, a total of 611 attended the vote, in which Merkel and her government needed a minimum of 311 favorable votes from their own ranks to save face and end the calls for an electoral advance from the opposition if the government was not backed by its deputies.

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An intense debate

The vote was preceded by a passionate debate in which the majority of the representatives of the parties of the government coalition – Christian Democrats (CDU), Bavarian Christian Socialists (CSU) and Liberals (FDP) – and the Social Democratic opposition (SPD) and Green defended the vote in favor.

Only the formation of La Izquierda and a small group of rebels of the Union (CDU / CSU) and the Liberals publicly rejected the expansion of the EFSF with the argument that it is a burden for future generations and the danger of no end the financial burden for the taxpayer.

Ministers of Finance and Economics, Christian Democrat Wolfgang Schäuble and liberal Philipp Rösler, respectively, personally intervened before the plenary to try to reduce the number of reticent in their own ranks .

Volker Kauder, leader of the parliamentary group of Chancellor Angela Merkel , made a final appeal on Thursday for the expansion of the EFSF. In addition, in statements that the Bild newspaper published last Wednesday, he insisted on the importance of the EFSF: “with the rescue fund we can put a brake on the expansion of the crisis , in case a country can not pay your debts totally or partially, “said Kauder

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The effects of the EFSF in Germany and Europe

In the case of Germany, the extension of the guarantee regime implies an increase in its contribution from the initial 123,000 million euros to 211,000 million, equivalent to practically two thirds of national budgets .

On July 21, the Heads of State and Government of the 17 countries of the Eurogroup agreed to give greater flexibility to the EFSF, in order to guarantee the financial stability of the eurozone and generate confidence in the markets .

In July, 17 Eurogroup countries agreed to give greater flexibility to the EFSF

This reform will allow the EFSF to lend money to countries with financial problems to prevent further deterioration of their situation, to finance the recapitalization of banks and, in exceptional cases, to buy sovereign bonds of countries in difficulties in secondary markets.

The temporary rescue fund will be replaced in 2013 by another permanent financial institution, the European Stability Mechanism (ESM, ESM), whose effective credit capacity will amount to 500,000 million euros.

With the favorable vote last Wednesday by the parliament of Finland there are already ten countries of the seventeen that form the Eurogroup in ratifying the agreement, after Spain, Belgium, France, Greece, Ireland, Italy, Luxembourg, Portugal and Slovenia.