Compiled By: Andrew Millichamp
Greece will be getting a gift of $44 billion from Germany on Dec. 13.
Germany’s parliament, the Bundestag voted 473-100 with 11 abstentions on Friday in favour of the latest Greece rescue package.
The Eurozone bailout is designed to keep Greece from bankruptcy.
According to BBC News, finance ministers of 17 Eurozone states agreed to the new payment.
Before the vote, German Finance Minister Wolfgang Schaeuble warned fellow German MPs the fate of the Eurozone was at stake.
“A Greek bankruptcy could lead to the break-up of the Eurozone,” said Schuaeuble in a speech to the Bundestag in Berlin. “The potential effects of a Greek default on other euro states would be grave – in truth the consequences would be unpredictable.”
According to the Associated Press, the Germans responded, as two of German’s three opposition parties voted largely in favour.
On Nov. 27, finance ministers of the Eurozone agreed to cut the rates on Greece’s bailout loans and to suspend interest payments for a decade, designed to give Greece more time to push through economic reforms.
Germany is Greece’s biggest creditor.
Economists say Greece’s debt burden is forecast to reach 190 per cent of its domestic product next year and can only be managed by writing off loans by governments.
However, Schaeuble said writing off loans sends the wrong message.
“If you say debt will be forgiven, then people’s readiness to save in order to get further aid is weakened,” he said according to the Associated Press report. “If we want to help Greece along this difficult road, we must advance step by step, and the wrong speculation at the wrong time doesn’t solve the problem.”
All in all Greece is far from economic safety but has taken a step in the right direction.
“The Greek population has had to bear a heavy burden,” Schuaeuble said in a Bloomberg article. “But if the Greek people are willing to carry the burden, we’re willing to help.”
According to 680 News, Frank-Walter Steinmeier, a member of the main opposition Social Democrats said the deal on the table “is not a sustainable solution for Greece.”
Steinmeier argued that this would merely buy time.