By Andreas Rinke
BERLIN, April 15 (Reuters) - Lawmakers in Germany's ruling coalition want parliament to have a say in determining the country's contributions to the permanent fund being set up to bail out struggling euro zone states from 2013.
Financial markets are wondering how this dispensation, which is enshrined in Germany's constitution and thus virtually certain to be granted, might affect payments of emergency loans from the fund, the European Stability Mechanism (ESM).
Germany's lower house, the Bundestag, has the right of consultation only over payments from the current euro zone bailout fund, the European Financial Stability Facility (EFSF).
The debate inside Germany is focused on whether contributions into the ESM should face the same level of scrutiny, be waved through automatically or be subject to a potential parliamentary veto.
In coming weeks, while negotiating a treaty over the fund with other euro zone states, Berlin will also prepare a national law to determine what role its parliament will play.
Finance Minister Wolfgang Schaeuble said he expected parliament to review any funding requests, and Germany's Federal Court of Auditors has recommended parliament have the same oversight over the ESM as with the existing rescue fund.
Following is an overview of the issues in play:
PAYMENT INTO THE ESM FUND
The Bundestag will vote on the entire ESM package, put forward as a draft law, in accordance with its constitutional role in budgetary issues.
All parties to the debate have ruled out approving any package that could see Germany wind up with more than a planned 190 billion euros of total exposure to the ESM without giving the Bundestag a say.
Germany would also like to stretch out its 21.6 billion euro contribution to the 80 billion euro capital base that forms the core of the ESM.
A question as to whether the law should specify the dates of the payments, which would need to be accelerated in case of a financial emergency, remains unanswered.
NEW TOOLS FOR THE ESM?
Unlike the EFSF, the ESM can be empowered in future with new policy tools if all the finance ministers on its governing council so decide.
In theory, this means the ministers could eventually choose to buy up sovereign debt in the secondary market using ESM funds -- something the ruling German coalition parties reject.
As a result, it is likely that parliament -- which is loath to write the government a blank cheque -- will seek to have some say in any decision that would expand the ESM's toolkit.
In this regard, representatives of all political persuasions are demanding a binding parliamentary vote on the finance ministers' decision-making powers.
ESM ACTIVATION
No troubled European state could seek the help of the ESM without Germany's approval.
But what needs to be clarified in the German ESM law is whether the government would need to seek parliamentary approval for every request for help.
Options debated so far range from requiring simple parliamentary consultation to binding parliamentary approval.
WHO DECIDES WHAT?
One possibility would be for the activation of the fund and examination of terms for bailouts to be handled by the Bundestag's powerful budget committee. Only fundamental changes to the ESM would require approval of the entire chamber.
In opposition to this stands the head of the lower house's European committee, Gunther Krichbaum, who wants the full Bundestag assembly to be involved in every aid request.
Another proposal is to set up a special committee in which delegates would be sworn to secrecy on sensitive financial details from aid-seeking countries.
A SAY FOR THE UPPER HOUSE?
Things could get even more complicated. The finance minister for the state of Bavaria, Georg Fahrenschon, has demanded that the Bundesrat also have the right to reject ESM decisions due to the impact they could have on the finances of Germany's regions.
(Writing by Brian Rohan and Tom Atkins; Editing by John Stonestreet)