Delay of vote on fiscal pact?

German Chancellor Angela Merkel is facing increasing problems in obtaining quick parliamentary approval for the European Union's fiscal pact and the eurozone's permanent rescue fund, the European Stability Mechanism (ESM).

Leaders of the country's main opposition parties told Merkel on Tuesday that they considered her plan to push the new legislation through both chambers before the summer break to be "too ambitious."

The EU fiscal pact aims to enforce German-style budget discipline across 25 of the 27 member countries and requires a two-thirds majority in the German parliament, the Bundestag. But opposition parties insisted that amendments were needed to make sure that the consolidation of finances went hand in hand with growth incentives to get struggling economies out of the doldrums.

"We think the pact needs to be complemented by a serious initiative to strengthen growth in Europe," Green party floor leader Jürgen Trittin told Reuters news agency on Tuesday after a meeting of parliamentary leaders with Finance Minister Wolfgang Schäuble.

Both the Greens and the Social Democrats said they wanted to see growth-boosting measures in place such as so-called "project bonds," which could be issued by the European Investment Bank to fund infrastructure schemes in economically depressed areas.

Transaction tax an illusion?

But they also reiterated their call for the introduction of a general financial transaction tax to cover the costs of EU-wide industrial restructuring. Opposition leaders reacted angrily to the Finance Minister's comments that it would be impossible to implement such a tax in the euro area, let alone the broader European Union.

Chancellor Merkel drew criticism for her late approval of a boost in bailout resources. As late as Monday she signaled that she was no longer opposed to temporarily letting the old European Financial Stability Facility (EFSF) run in parallel to the new and permanent rescue fund, the European Stability Mechanism (ESM).

The combination of the two instruments would boost emergency resources to around 700 billion euros ($933 billion) from a maximum of 500 billion euros under existing plans.

Opposition figures said in Berlin that the adoption of growth-boosting measures needed more time than had been envisaged by the chancellor. They added that the coalition government was under no time pressure to finalize the deal by summer, since parliamentary approval was only needed by the end of this year.

hg/mll  (Reuters, AFP)