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Yes to bailout

September 8, 2011

French lawmakers have approved their part of the latest eurozone bailout package for Greece - the first European country to do so. France's contribution will be 15 billion euros.

A sack full of euros
France will contribute 15 billion euros to the EFSFImage: BilderBox

France has become the first European country to approve the latest eurozone bailout package for Greece, after the French Senate gave it the go-ahead on Thursday evening.

France's upper house of parliament on Thursday voted on France's contribution to bail out Greece's faltering economy alongside President Nicolas Sarkozy's domestic austerity plan.

The 160-billion-euro ($223 billion) plan to strengthen the European Financial Stability Fund (EFSF) was agreed by eurozone leaders on July 21. However, the plan has hit a number of political setbacks across the continent, and it's not certain that it will be passed by all domestic parliaments.

In the French parliament, senators from the ruling right-wing UMP party voted for the measure while the opposition Socialists abstained and the Communists voted against. The French chunk of the bailout package will amount to 15 billion euros.

France gets ball rolling

Merkel speaking in Bundestag
The Bundestag will vote on its portion of the fund in OctoberImage: picture-alliance/dpa

France is the first eurozone nation to pass the measure, after German Chancellor Angela Merkel's bid to ratify her side of the bill ran into a legal challenge.

On Thursday, the German Bundestag began debating boosting the scale of the EFSF. Just one day earlier, Germany's constitutional court ruled that Berlin's contributions to aid eurozone countries were constitutional, but said parliament must have a bigger say in future bailouts.

Finance Minister Wolfgang Schäuble told the first-reading debate in the Bundestag that the enlarged EFSF was vital to stabilize the euro.

Meanwhile, the European Central Bank on Thursday decided to hold interest rates steady at 1.5 percent, after increasing rates in April and July.

ECB President Jean-Claude Trichet said there were "intensified downside risks" to the economic outlook for the eurozone. He said the ECB expected the euro area to "grow moderately."

Trichet's gloomy prognosis of an "enormous level of uncertainty" caused the euro to tumble in afternoon trading.

Author: Catherine Bolsover (AFP, dpa)
Editor: Martin Kuebler

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