Reuters -
German Chancellor Angela Merkel faces a critical challenge to her
authority on Thursday when some of her coalition, worried about throwing
good money after bad by bailing out Greece, could humiliate her in a vote on euro-zone rescue schemes.
Support from the center-left opposition will ensure Germany
passes the bill on new powers for the European Financial Stability
Facility (EFSF), which some countries like Finland have ratified but
others, including Slovakia, are disputing.
But
if dissent in her coalition forces Merkel to rely on opposition votes
to pass the new powers for the 440 billion euro ($600 billion) rescue
fund, it would be politically damaging for the conservative chancellor
and undermine her ability to pilot fresh measures to combat the euro zone debt crisis.
Merkel's
Christian Democrats (CDU) and their allies were pressuring a handful of
dissidents to get in line before the vote at 11 a.m. (0900 GMT). It
should be clear about half an hour after that the EFSF has been passed,
but any word on how many government lawmakers rebelled could take
another hour.
"We are working to
convince people," CDU second-in-command Hermann Groehe told Reuters. He
said "it will be close" but the government would not put itself in the
humiliating position of depending on the Social Democrats (SPD) and
Greens.
Merkel tried to assure her
coalition that German taxpayers' money would not be wasted by voting for
a new bailout for Athens -- but she could not rule out that the money
might be written off if, as financial markets increasingly fear, Greece defaults.
With
Germany shouldering up to 211 billion euros of the EFSF guarantees,
critics fear the fund will not be enough and taxpayers will be asked for
more.
That impression was
reinforced by talk at the International Monetary Fund last weekend of
the need to beef up the EFSF even more -- on top of the extra powers
decided by European leaders in July -- by leveraging its capital and
bring forward the permanent scheme supposed to replace it in mid-2013.
German
Finance Minister Wolfgang Schaeuble denied just hours before the vote
that he had used "that word" -- leverage -- and said in a radio
interview "we have to stick to what the German Bundestag (lower house of
parliament) decides."
RESCUE THE EURO OR THE FDP
Merkel
is often accused in Europe and at home of dithering on the euro crisis
and if she does not win the EFSF vote on her own terms, it would damage
her hopes of taking the conservative bloc she has led for 11 years into
the next elections in 2013.
International
auditors return to Athens on Thursday to deliver their verdict on
whether Greece's tougher austerity measures qualify for further aid.
The
chancellor has told Greece she wants to wait for the results of an
audit by the "troika" of the European Union, European Central Bank and
IMF to see whether its findings "tell us we will have to renegotiate or
not."
Such talk by Merkel and
other German officials may refer to raising the level of private
creditor involvement in the Greek bailout, by getting them to accept
bigger potential losses -- or "haircuts" -- on their Greek sovereign
bond investments.
Senior coalition
figures like Economy Minister Philipp Roesler, head of Merkel's Free
Democrat (FDP) partners, have already said an "orderly" Greek default
should not be taboo.
With a core
of naysayers in the CDU, its Bavarian allies the CSU and the FDP, the
vote will be scrutinized to see how close she gets to a convincing 311
'yes' votes from her own bloc in the 620-seat Bundestag.
If
there are more than 19 rebels, Merkel will have passed the EFSF thanks
to the center-left opposition and may have to rethink how to address
growing discontent among her supporters and the population at large
about the euro zone debt crisis.
Sentiment remains divided. Even though labor unions called on MPs to back the measure, the conservatives' "Mittelstand" small business alliance urged MPs to vote 'no'.
"It is personally a difficult decision but politically the correct one," the group said.
The
SPD and Greens have won a run of state elections this year and, with
two more votes in coming months on the second Greek bailout and a
permanent mechanism to succeed the EFSF, can portray themselves as
defenders of the single currency.
With
the FDP's popularity sliding to just 2 percent in some recent polls and
state elections, and the party increasingly critical of euro zone
bailouts, it often appears more of a liability than an asset for Merkel.
"In
the end, the chancellor will have to decide: either she wants to rescue
the euro or the FDP," said former SPD foreign minister Frank-Walter
Steinmeier of the SPD to Bild newspaper.
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