Germany throws support for bailout, EU pledges more cash
German Chancellor Angela Merkel (L) confer with finance minister Wolfgang Schaeuble during a debate in the Bundestag, the German lower house of parliament in Berlin on July 17, 2015.
Berlin - The twin developments capped a week in which the proposed bailout agreed by the 19 eurozone leaders on Monday has cleared a string of hurdles.
The bailout of Greece took two big strides forward on Friday as German lawmakers overwhelmingly gave their backing to another financial rescue and the European Union confirmed it would get Athens enough money to avoid an imminent debt default.
The twin developments capped a week in which the proposed bailout agreed by the 19 eurozone leaders on Monday has cleared a string of hurdles.
As a result, expectations have risen that Greece will secure a three-year financial bailout which will allow it to get back toward some sort of economic normality following weeks of crisis that's seen banks shuttered and withdrawals at ATMs limited to a paltry ?60 a day.
The first big development on Friday was the news that German lawmakers, following more than three hours of debate, voted 439-119 in favour of opening detailed discussions on the bailout package, after Chancellor Angela Merkel warned that the cash-strapped country would face chaos without a deal.
That was later followed by confirmation that the EU had worked out the mechanism it would use to get Greece ?7.16 billion ($7.7 billion) in short-term cash by Monday, when it has a ?4.2 billion payment due to the European Central Bank.
"What we're witnessing is European solidarity in action," said Valdis Dombrovskis, the EU Commission's vice-president for the euro, who revealed the news of the short-term bridging loan.
"Politicians across 27 countries have invested their own political capital to speed through national decisions to shoulder Greece at this difficult time for the country," he added.
Without the so-called bridge financing, which will come from funds remaining in a long-dormant EU programme called the European Financial Stabilization Mechanism, Greece would not have been able to make the payment.
Though the broad outlines of the Greek bailout were agreed Monday, specific terms will now be thrashed out between Greece and its European creditors. The process is expected to last around four weeks and to lead to Greece getting around ?85 billion to help it pay off upcoming debts.
Germany has been the largest single contributor to Greece's bailouts and has taken a hard line, insisting on stringent spending cuts, tax hikes and wide-ranging economic reforms in return.
"The principle... of responsibility and solidarity that has guided us since the beginning of the European debt crisis marks the entire result from Monday," Merkel told the special session of Parliament.
The alternative to an agreement, she added, "would not be a time-out from the euro that would be orderly ... but predictable chaos."
Merkel will have to return to Parliament to seek approval for the final deal when the negotiations are concluded.
"I know that many have doubts and concerns about whether this road will be successful, about whether Greece will have the strength to take it in the long term, and no one can brush aside these concerns," she said. "But I am firmly convinced of one thing: we would be grossly negligent, even irresponsible, if we did not at least try this road." - AP