Steve Chiotakis: It’s a major step in the struggle to fix Europe’s sprawling sovereign debt crisis. The German parliament voted 523 to 85 to expand the size and power of the eurozone bailout fund.
Marketplace’s Stephen Beard is with us live from our European Desk in London with the latest on the vote. Hi Stephen.
Stephen Beard: Hello Steve.
Chiotakis: So this seems like a pretty convincing win for German Chancellor Angela Merkel, no?
Beard: On the face of it, yes. But unfortunately — as with every other aspect of this crisis — it’s not quite as simple as it seems. Merkel has this thumping majority because she has the support of the socialist opposition, which is very pro-Europe. It’s not yet clear how many members of her own party and coalition partners voted against her. That analysis is underway — we should know fairly soon.
It might show that Merkel has been seriously undermined, and her coaltion could conceivably fall apart.
Chiotakis: Interesting. So where do we go from here, Stephen, with the bail-out of countries like such as Greece, Portugal, and the others?
Beard: There’s no doubt that things are looking a bit more positive now. However, everyone acknowledges that even the expanded, enhanced bailout fund approved today won’t be big enough to help — for example — Italy fend off default. Italy is too big. And the idea of a much bigger fund leveraging it up, to something like 5 times its current size — around $3 trillion — that’s much more controversial in Germany. If Merkel’s been seriously damaged politically, she’ll struggle to get that through. It’s safe to say the crisis is not over yet.
Chiotakis: It certainly isn’t. Marketplace’s Stephen Beard, reporting live from London. Stephen, thank you.
Beard: OK Steve.
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