German parliament passes EU growth pact | News | DW | 29.06.2012
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German parliament passes EU growth pact

The lower house of the German parliament, the Bundestag, approved a European Union growth pact on Friday, hours after Chancellor Angela Merkel had finalized the plan at a meeting of EU leaders in Brussels.

The measure passed with 491 yes votes to 111 no votes and 6 abstentions, more than the two-thirds majority needed.

The upper house of parliament, the Bundesrat, must still approve the measure.

Merkel lauded the EU's new 120-billion-euro ($149 billion) growth pact after at the close of a two-day summit in Brussels. Politicians made key breakthroughs in the early hours of Friday morning after some 13 hours of talks, with the progress being largely touted as a win for Spain and Italy.

To back up demands for action to reduce their borrowing costs, the two countries had withheld their approval for the growth pact. The main decision was to allow the eurozone's overarching rescue fund to provide money directly to banks in Italy and Spain, rather than burdening the governments in Rome and Madrid with the debt.

"The process was tough. The outcome was good," Italian Prime Minister Mario Monti said after the talks.

The 27 EU leaders also agreed that banks within the eurozone would be regulated by a single entity, the European Central Bank in Frankfurt, in a bid to make sure they were operating to similar standards across the bloc.

The decision will allow the currency's next-generation rainy-day fund, the European Stability Mechanism, to lend directly to at-risk creditors instead of providing the money through national governments. In the event that the ESM takes a long time to bring into force, its predecessor, the European Financial Stability Facility, might be granted the same ability.

"We stayed true to our philosophy that there has to be a give and take," Merkel said on Friday, a message that might well have been aimed at her more skeptical colleagues in Berlin.

mz/msh/mkg (AP, dpa, Reuters)