German parliament votes to fund Spanish bailout
The German Parliament (Bundestag) has cleared the way for the interim financial-rescue package EFSF to Spain. With 473 of 583 votes, MEPs voted by roll call vote at a special meeting on Thursday 19 July 2012, for an proposal brought in by the Ministry of Finance to grant an emergency measure of the EFSF of up to EUR 100 billion. 97 MPs voted against and 13 abstained.
According to the proposal the term of the emergency measure are 18 months. The parliament also approved the transfer of rights and obligations of the EFSF after establishing on the European Stability Mechanism (ESM). This will provide the ESM a preferential creditor status. This was "...an individual case basis and is intended to sustain the exception of access to markets in Spain", as is stated in the support of the application.
Prior to the debate and vote on Thursday afternoon, Finance Minister Dr. Wolfgang Schäuble (CDU) spoke about an "exceptional situation" in Spain in declaring the position of the administration. He reiterated the threat of "serious contamination problems" in Europe if this action was not taken. A comprehensive, albeit brisk, overview of the situation of the Spanish financial sector led to the conclusion that this action was a "contribution to the stabilization of the Euro-zone as a whole." With its pension and labour market reforms and an ambitious savings program, Spain was, "on the right track," stated the minister. However, these efforts are threatened by, "uncertainties in the banking sector." With the assistance from the EFSF, the Spanish State gains the time it needs for its reform.
Schäuble went on to make it clear that the money would not be paid directly to Spanish banks. Spain had made the initial request for the bailout, and is financially liable for the loan assistance. In addition, the assistance would be given only under strict conditions which provide for, among other things, the need for an external audit mechanism. This was no easy feat for Ms. Merkel to arrange, and some experts have suggested that it was one of her more clever political moves.