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Germany might have to foot entire euro aid bill-SPD

Published 05/11/2010, 05:14 AM
Updated 05/11/2010, 05:28 AM

BERLIN, May 11 (Reuters) - Germany's opposition Social Democrats (SPD) said on Tuesday they had not decided whether to support a European rescue package for the euro, and warned the country could end up footing the entire cost of the bill.

The package -- 440 billion euros in guarantees from euro states plus 60 billion euros in a European stabilisation fund -- includes some 123 billion in loan guarantees from Germany, a German government source told Reuters on Tuesday.

Another source said Chancellor Angela Merkel's cabinet had approved Germany's share in the aid, which has been strongly criticized by conservative media and could face a legal challenge at the country's highest court.

SPD parliamentary whip Thomas Oppermann told ARD television there were still too many open questions about the plan, which parliament is due to begin debating next week.

"What happens if other countries who get aid from the package drop out? Will the German share increase then?," he said.

The government has said the German share could rise because not all EU member states would have the means to participate.

"In the worst case scenario, the Germans may have to guarantee the 440 billion euros alone, and we won't be able to do that," added Oppermann.

"After the Lehman crisis, after the Greek crisis, we're for the third time faced with the decision of approving packages the German taxpayer will probably have to pay for in the end."

The opposition Greens said on Monday the plan was unlikely to come to a parliamentary vote before June.

Although Merkel does not need the SPD's support to get the financial aid package bill through the lower house of parliament, she is keen for as much backing as possible due to widespread public opposition to Germany financing any bailouts.

The make-up of the upper house is still unclear after Merkel's centre-right coalition lost its automatic majority in elections in North Rhine-Westphalia at the weekend.

"We are Europe's fools again!" Germany's biggest selling daily, Bild, said on its front page on Tuesday.

Meanwhile, hedge funds, banks and speculators could do what they wanted on financial markets, Oppermann said.

"A substantial participation of the banks and hedge funds in the costs of the crisis must be arranged," he said.

"Today we'll probably just see a simple authorisation of credit again. That can't be it. If we want to protect the euro...then measures must be agreed that at least make speculative trading on markets harder or even impossible."

If the government did approve a bill to introduce a financial transaction tax, then it was "not ruled out" the SPD would back the European aid package, Oppermann said.

The centre-left SPD abstained from voting on the Greek aid package last week after failing to push through an addendum in support of a European financial transaction tax.

EU finance ministers said the International Monetary Fund was expected to contribute 250 billion euros to the package, taking the total to 750 billion euros, about $1 trillion.

(Reporting by Dave Graham; Editing by Sonya Hepinstall)

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