German legislators endorse EU anti-crisis schemes

BERLIN - Germany's Bundesrat, or the upper house of parliament, approved the European Union's fiscal pact and its permanent bailout mechanism late Friday, after the Bundestag lower house adopted these crucial anti-crisis tools earlier in the day.

In the Bundesrat representing the country's 16 states, 65 lawmakers out of the 69 who voted endorsed the fiscal pact and the permanent rescue scheme, or the European Stability Mechanism.

After weeks of bargaining, Chancellor Angela Merkel gained support from the opposition Social Democrats and Green Party by agreeing to focus more on growth stimulating measures and pushing for the launching of financial transaction tax in Europe.

Merkel also defended agreements reached at the just-ended EU summit that European Stability Mechanism fund could recapitalize vulnerable banks directly and that the bailout funds can buy up bonds of debt-ridden countries. Germany had opposed the mechanism before.

In a speech in the Bundestag, Merkel said that some eurozone countries are facing severe difficulties of capital-raising with high interest rates, and the bloc needs to find ways to ease the tension.

Merkel, the main architect of the fiscal pact, stressed that any application to the direct aid from the European Stability Mechanism would be accompanied with strict conditions, and there was "a concrete link" between the fiscal pact for tougher budget discipline and the ESM.

The voting in German parliament marked "an important signal of the determination and unity" both domestically and externally, and the contracts "make irreversible steps to a sustainable stability Union", she added.

The approval by parliament, however, is not the final step of ratification, as President Joachim Gauck decided to delay his sign-off at the request of the German Constitutional Court.

The court said that it has received more than 1,000 objections over the two instruments, and needs weeks of time to handle these appeals related to the legality of the European Stability Mechanism and fiscal pact.

The fiscal pact, designed to prevent excessive public deficits through stricter budgetary rules, has been signed by 25 of the EU's 27 members so far.

The 500-billion-euro ($623 billion) European Stability Mechanism, which is to take over from the European Financial Stability Facility, was originally planned to operate on July 1, but is widely expected to be delayed.