EU fiscal pact on Budget discipline blocked in Germany

Germany’s Opposition-ruled states have blocked the EU fiscal pact on Budget discipline in the Bundesrat, the Upper House of Parliament, as the Opposition parties created new hurdles for Chancellor Angela Merkel’s Government ahead of the general elections in September.

The States ruled by the Social Democratic Party, the Green Party and the Left Party today wielded their new majority in the representation of 16 German States to forward a legislation on the fiscal pact to the parliamentary mediation committee, which will decide whether the treaty should be changed.

The fiscal pact, which was signed by 25 of the EU’s 27 member nations in March, 2012, has been one of the key instruments at the disposal of the euro zone countries to deal with the debt crisis. It was approved by the Bundestag, the Lower House of Parliament, at the end of last year.

Participating in a debate in the Bundesrat, Rhineland Palatinate state Finance Minister Carsten Kuehl said the fiscal pact has been presented to the mediation committee because the centre-right coalition government in Berlin did not fulfil its assurances last year.

State Prime Minister of Saxony Stanislaw Tillich deplored the Opposition’s attempts to make governing difficult for Merkel’s Government.

Germany should send a signal of strength and reliability, especially at a time of uncertainty about the future developments in Italy after the election. There should not be any wavering in demanding Budget discipline in other European countries, he told the House.

The balance of power in Berlin has shifted in favour of the Bundesrat after the SPD and the Green Party won the state election in Lower Saxony early last month with a wafer thin majority.

For the first time since 1999, the SPD and the Green Party have a majority in the representation of the States. The States ruled by the SPD, the Green Party and the Left Party together have 36 of the 69 votes in the Bundesrat.

At the same time, Merkel’s centre-right coalition’s strength in the house shrank to just 15 seats.

In another snipe at Merkel’s Government, the Opposition-ruled States passed a draft legislation to introduce a legally-binding minimum wage of 8.50 euro per hour at the national level and a draft law on equal tax status for gay couple.

Both the proposals are opposed by Chancellor Merkel’s Christian Democratic Union (CDU) and it is likely that they will be rejected when they come up for debate in the Bundestag, the Lower House of parliament, in which the coalition has comfortable majority.

The SPD and the Green Party have been arguing that a legally-binding minimum wage is very crucial to avoid exploitation of low-paid workers in various business and industrial sectors.

A minimum wage requirement will also help improve their retirement benefits. The CDU and their coalition partner Free Democratic Party oppose intervention by the Government to fix the minimum wages and demand that they should be left to employers and workers’ representatives to decide through negotiations.

The legislation on equal tax rights for gay couples is intended to ensure that they can avail of the same tax rebates and other benefits as their heterosexual counterparts.

COMMENT NOW