09 MAR 2011
Response to debt crisis a hurdle to establishing stability fund
Two German states governed by Chancellor Angela Merkel's party demanded a say in shaping the euro-area's response to the debt crisis, raising a potential hurdle to any attempt to pass additional measures in parliament.
The state governments in Hesse, whose biggest city is Frankfurt, and Baden-Wuerttemberg, which will hold elections on March 27, rejected paying more into a permanent crisis mechanism being forged, saying they want to influence policy at an early stage to temper any drain on their budgets.
States such as Hesse aren't "satisfied reading in the papers what the government plans", European Affairs and Justice Minister Joerg-Uwe Hahn said yesterday. Germany's 16 states "must be closely involved" in shaping the European Union's rescue facility, Willi Staechele, finance minister in Baden-Wuerttemberg, said.
The reservations in Germany's financial heartland over the post-2013 safety net underscore the balancing act Ms Merkel faces going into two EU summits this month aimed at staunching the crisis while facing elections in six German states this year.
Read entire article