–Adds Confirmation By President That He Will Delay Signature Of Bills

BERLIN (MNI) – German Chancellor Angela Merkel’s center-right
coalition government and the main opposition parties on Thursday reached
a deal for the ratification of the EU fiscal compact in the lower house
of parliament, the Bundestag, on June 29 along with the ratification of
the permanent European bailout fund ESM.

Since ratification of the fiscal compact in Germany requires a
two-thirds majority in the Bundestag and the Bundesrat, the upper house
representing the 16 states, Merkel needs support from the opposition.

Frank-Walter Steinmeier, the parliamentary leader of the strongest
opposition party in the Bundestag, the center-left SPD, said after the
talks that the government now supports the opposition’s demand for a
European growth package that would shift EU structural funds to highly
indebted member states, increase the capital of the European Investment
Bank, and allow for so-called project bonds to finance investment.

Moreover, the government has promised to lobby at the European
level for the introduction of a financial transaction tax, Steinmeier
said.

Volker Kauder, the parliamentary leader of Merkel’s CDU/CSU bloc,
stressed that the opposition’s demand for a joint debt redemption fund
in the Eurozone had been turned down, given that it would violate EU
rules.

The concept of the fund was devised last year by the government’s
council of independent economic advisers, the so called “wise men.” It
envisions the Eurozone states pooling the portion of their public debts
above 60% of GDP and refinancing this through joint eurobonds while
agreeing on fixed debt repayment plans.

The government still needs to cut a deal with the regional states
in order to assure a two-thirds majority in the upper house. The states
demand from the federal government a larger share of public revenue
because the fiscal compact sets tougher deficit rules than the German
“debt brake” law.

The government will meet with the state representatives on Sunday.
“We assume that we can also reach an agreement with the states,” Kauder
said today.

The Bundesrat is scheduled to vote on the fiscal compact and the
ESM also on June 29.

Yet it will likely still take several weeks before the bills will
be become law. German President Joachim Gauck, confirming a report in
the daily Sueddeutsche Zeitung, said on Thursday that he planned to
delay signing the ESM and the fiscal compact bills.

The German Constitutional Court had asked him to wait until it had
decided on preliminary injunctions against the two bills, Gauck said.
Traditionally, it takes the court a few weeks to decide on such
preliminary injunctions, the Sueddeutsche Zeitung said in its report.

–Berlin bureau: +49-30-22 62 05 80; email: twidder@marketnews.com

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