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September 24, 2021

Germany approves EU bailout fund

As Europe’s largest economy, Germany’s commitment to the fund will rise from EUR 123 bln to 211 bln.

BERLIN – A large majority in the German parliament has approved expanded powers for the EU’s main bailout fund, the BBC reported. The vote was seen as a test of Chancellor Angela Merkel’s authority, as some in her coalition vowed to oppose the bill.

Many Germans are against committing more money to prop up struggling eurozone members such as Greece. There are protests in Athens where international inspectors are due for talks on further bailout funds.

The measure is expected to pass in Germany’s upper house of parliament, where it will be put to a vote on Friday. Five-hundred and twenty-three deputies in the Bundestag approved the bill, 85 voted against and three abstained in the 620-seat chamber. Nine members were not present.

The outcome of the vote was not in question, as the main opposition parties, the SPD and the Greens, indicated they would support the expansion of the fund. Before the vote, there was intense lobbying by Merkel’s Christian Democrats (CDU) and their coalition allies to pressure the handful of dissidents to get in line. A total of 315 coalition deputies voted in favour, meaning Merkel did not need to rely on the opposition support.

A reliance on this support would have cast into doubt her ability to get forthcoming votes on a further bailout for Greece and a permanent successor to the main EU bailout fund, the European Financial Stability Facility (EFSF), through the Bundestag. All 17 countries that use the euro must ratify the commitment to expand the powers of the EFSF and boost its bailout guarantees to EUR 440 bln. So far, 10 have approved the measure.

As Europe’s largest economy, Germany’s commitment to the fund would rise from 123bn euros to 211bn. The former President of European Commission Romano Prodi said the German public will come round to supporting the deal

Barroso backs transactions tax

Jose Manuel Barroso, European Commission president, has proposed a tax on financial transactions to help rebuild public finances across the bloc, calling it a matter of fairness, Financial Times reported. Barroso, in his second annual “state of the union” address to the European parliament on Wednesday, said that the countries that use the euro must embark on closer co-ordination of their economies to protect the single currency, and that changing the EU treaties – an arduous and divisive process – might be necessary to achieve this.

The proposed financial transactions tax is divisive. While France and Germany, the EU’s biggest members, have pushed for it, the UK – home to the EU’s biggest financial services industry – has staunchly opposed it. Barroso did not release details of his plan, except to say it could raise some EUR 55 bln a year.

‘Goldman sachs rules the world’

Meanwhile, a scandal broke out after Alessio Rastani, a man identified as an “independent trader,” appeared on a BBC News programme, declaring that millions of people were about to lose everything, the New York Times said. He also proclaimed that the world is not led by government, but that “Goldman Sachs rules the world.”

Twitter was abuzz with evidence that Rastani was actually a member of the Yes Men, a political protest group, and that his BBC appearance was a hoax. Video on the Internet appears to show Rastani posing as a Dow Chemical spokesman in an earlier news appearance, the publication said.

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