Bailout holdout

Germany's opposition Social Democrats (SPD) have said they will abstain from Friday's vote on a 750-billion-euro ($920 billion) rescue package, unless Chancellor Angela Merkel's government agrees to push their legislation for a tax on international financial transactions.

Frank-Walter Steinmeier, the SPD's parliamentary leader, said the decision made sense in light of what he called the ruling coalition's failure to show interest in a joint resolution on stronger market regulation.

Merkel's coalition of Christian Democrats and Free Democrats doesn't need the SPD's support to pass the bailout in either house of parliament. But having cross-party support might soften strong public opposition to the measure.

The SPD says it is not opposed to the package as a whole, in which Germany would provide 148 billion euros in loan guarantees, but thinks the financial sector should carry some of the load.

The SPD will present its own bill on a transaction tax before the bailout bill comes up for a vote on Friday. If Merkel's coalition supports it, then the SPD will vote in favor of the bailout package. But if they do not, the SPD will either vote against it or abstain from the vote entirely.

There could be abstentions among the Christian Democrats (CDU) as well. Sources within the party told the Reuters news agency that a test vote showed seven members of the CDU voting against the measure and two abstaining.

Coalition talks break down in NRW

The news came amid an announcement that exploratory coalition talks between the SPD, Left Party and the Greens in North Rhine-Westphalia had collapsed, raising the possibility of a grand coalition between the SPD and the Christian Democrats.

"We have come to the conclusion that the Left Party in their current form is ready for neither government nor a coalition," said Hannelore Kraft, the SPD's party chief in the state.

The talks lasted only hours, and dissolved over what the SPD and Greens saw as the Left Party's failure to adequately distance themselves from the politics of the communist East German state from which they have their political roots.

The CDU's national party chief welcomed the SPD's decision to abandon coalition talks with the Left.

"North Rhine-Westphalia does not need to lean further to the left; it needs stable political conditions," Hermann Groehe told the daily newspaper Rheinische Post for Friday's editions. "Therefore it's a good thing that the SPD has finally sought a conversation with the CDU."

Christian Democrats in the state lost enough seats in regional elections earlier this month to lose the party's majority at the federal level. In the state parliament, they have the same number of seats, 67, as the runner-up SPD, meaning that neither party can rule without forming a coalition.

Kraft said that coalition talks between her party and the Christian Democrats could begin next Tuesday or Wednesday.

svs/Reuters/dpa/apn/AFP
Editor: Martin Kuebler