Strings attached

Even if Britain and the Czech Republic refused to participate, 25 of the 27 EU member states on Friday agreed on the fiscal pact in Brussels. In it, countries agreed to enact strict measures against big budget deficits, including a German-style debt brake.

If they violate the budget rules, members will have to pay into the eurozone rescue fund or, if they are not in the eurozone, they will pay into the general EU budget.

The agreement allows European institutions to intervene in one of the holiest rights of national parliaments - the right to set and manage the budget. The German Finance Ministry has now found out that Article 23 of the Basic Law stipulates that to forfeit that right at the national level, a two-thirds majority in both chambers of parliament is needed to approve the change.

The government, however, only has a simple majority in the lower chamber, the Bundestag, and none in the upper chamber, the Bundesrat.

Opposition demands concessions

So, Chancellor Angela Merkel needs the opposition to push through the fiscal pact at the national level. Naturally, the opposition wants something in return. The Social Democrats and the Greens are rehashing some of their favorite topics like the financial transaction tax, wealth tax and measures to stimulate the economy - all previously rejected by the ruling coalition.

"We need an initiative for more growth, and we have to get the money from the financial markets," Social Democratic Party chief Sigmar Gabriel said. Gabriel insisted that the financial markets, which in his view were responsible for the debt crisis in the first place, have to contribute their share to solving the crisis. He also said that the coalition should do more to stimulate job creation.

The position of the Greens is very similar. "The EU has to be able to stimulate growth, and it needs income to make that happen," parliamentary leader Jürgen Trittin told the dpa news agency. Party co-head Claudia Roth said it was not enough that Merkel herself was in favor of a financial transaction tax. The whole government needed to agree to it, she said.

Transaction tax a hot potato

Merkel has so far been open to the French proposal of a financial transaction tax at the European level, but keeps referring to the opposition of her coalition partner, the Free Democrats.

Free Democrat chief Rainer Brüderle swiftly rejected the tax, calling it a "pseudo solution" on German public radio because in the end, he said, bank customers would pay for it.

The Free Democrats, he said, were in favor of regulating the financial markets, "but it shouldn't lead to competitive disadvantage in certain parts of Europe, while London is laughing all the way to the bank," he said. The UK has been strictly opposed to the idea of a financial transaction tax at the EU level.

So, it remains to be seen what rabbits the opposition can pull out of its hat. Not many, says the General Secretary of the Free Democrats, Patrick Döring. He thinks it is incredible that the opposition Social Democrats and the Greens would use the fiscal pact for political bargaining. "To do that, is to act irresponsibly," he said.

But the government's spokesman, Steffen Seibert, said the government was confident of getting the two-thirds majority. "If there is a need for further talks, the government will look forward to holding them."

So far, the government has always consulted the opposition with regards to measures designed to fight the debt crisis, and it has always won approval by most Green and Social Democrat MPs.

Left party the odd one out

The Left party is the only parliamentary group that rejects the fiscal pact in its entirety. Party chief Klaus Ernst called it "a mechanism designed to reduce democracy and the social state in Europe." Sarah Wagenknecht, who is from the communist wing of the party, said if the Social Democrats were serious about their criticism, they would have rejected the pact.

"A united opposition could and should prevent Europe from being 'saved' to death and prevent workers, the unemployed and pensioners from bearing the brunt of the savings," she said.

Author: Peter Stützle / ng
Editor: Spencer Kimball