The Bundestag has voted overwhelmingly in favour of a third rescue package for Greece. According to Federal Finance Minister Schäuble, the aid is vital for a "strong and reliable Europe". The new loans of up to 86 billion euros will be made available over the next three years to Greece.
453 MPs voted in favour of the motion by Federal Finance Minister Wolfgang Schäuble to grant financial aid to Greece, while 113 voted against it and 18 abstained. The vote also means that the first 26 billion euro instalment of the package can be released.
"A strong Europe is not possible without stability and solidarity", Schäuble declared in his policy statement before the German Bundestag. The envisaged reform programme should help return the Greek economy back to growth, as has already happened in Ireland, Portugal, Spain and Cyprus.
"Of course, after the experiences of the past years, there is no guarantee that everything will work, and doubts are always permitted; however, given that the fact that the Greek parliament has already approved most of the ‛prior actions’, it would be irresponsible not to use the opportunity for a new start in Greece", Schäuble said in his policy statement.
If Greece does everything that has been agreed, then this program is designed over the next three years to bring Greece back onto a sustainable path, said Schäuble. Greece should then be able to fund itself on the financial markets without guarantees from the European rescue fund. "We’ve done the math very seriously", the minister stressed. The coalition partner also agreed with him: "Financial aid is conditional upon reform", the Chairman of the SPD Parliamentary Group Thomas Oppermann said. In 2016, Greece should already achieve a primary surplus of 0.7 percent.
A haircut is not possible because the European treaties do not allow it, the minister said, adding that Greece’s debt sustainability could be achieved without a debt write-down. Schäuble said he did however still see some leeway for debt relief.
The basis of the decision by the Bundestag is the agreement in principle reached between Greece and its creditors. The ECB, the EU and the IMF had agreed earlier this week on a so-called Memorandum of Understanding (MoU). The MoU contains reform requirements for the next years and a number of "prior actions". Reform progress will be evaluated every three months, starting on 1 October.
The Federal Finance Minister said the International Monetary Fund’s (IMF) continued participation was a conditio sine qua non to grant new aid to Greece: "For the Federal Government, it is indispensable that the International Monetary Fund, with its special expertise in sovereign debt crises, remain on board”. This view is shared by the eurogroup, he said.
Schäuble stressed that it was already clear from the June declaration that the IMF would decide only in October whether it would participate in a new programme. The Fund’s Managing Director Christine Lagarde already said that she would recommend to the IMF boards that the IMF take part in the programme from October, provided that certain conditions are met, such as a reform of pensions and bank governance, as well as an agreement on Greece’s debt sustainability.
Schäuble concluded by saying: "We need a strong, reliable Europe. This is not possible without stability and solidarity."