REPORTING FROM LONDON -– In a key test for Europe's attempts to resolve its raging debt crisis, German lawmakers Thursday ratified a controversial plan to strengthen the continent’s $600-billion bailout fund.
It was an important victory for Germany's leader, Angela Merkel, who staked much of her authority as chancellor on securing approval of the plan.
The vote in favor was a decisive 523-85 with 3 abstentions. But more important was the fact that Merkel was able to muster a majority from within her own center-right coalition, despite threats of a backbench rebellion. If she had had to count on opposition votes to get the measure passed, her credibility as chancellor would have been seriously eroded.
Bailing out debt-ridden nations such as Greece and Portugal has become a distasteful exercise to many of Merkel's compatriots, who feel their taxes are going toward propping up spendthrift countries that ought to pay their own debts.
"We've gone on a slippery slope with the Greek bailout," lawmaker Klaus-Peter Willsch told the Bundestag, breaking ranks with fellow members of Merkel's ruling party, the Christian Democratic Union. "This will cost a lot of money, money that we don't have."
But analysts describe the beefed-up rescue fund as a crucial step in Europe's efforts to get a handle on its debt crisis, even though many economists say that it is far from enough and that bolder measures are needed fast to keep the crisis from engulfing bigger nations such as Spain and Italy.
The plan to give the emergency fund expanded powers to buy sovereign bonds and to lend to cash-squeezed banks was crafted by European leaders in July, but it needs the approval of all 17 national parliaments in the Eurozone to go into effect.
Support from Germany, Europe's largest economy, is imperative. On Wednesday, Finland's parliament also approved the expanded fund, despite heavy opposition in that country.
Photo: German Chancellor Angela Merkel speaks with Finance Minister Wolfgang Schaeuble on Thursday at the lower house of Parliament in Berlin. Credit: John MacDougall / AFP/Getty Images
-- Henry Chu, with Aaron Wiener in Berlin