Merkel resists conflicting pressures in Greek vote

Mon Feb 27, 2012 11:17am EST
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By Stephen Brown and Alexandra Hudson

BERLIN (Reuters) - Germany's parliament was set to endorse the latest Greek bailout on Monday after Chancellor Angela Merkel rejected both domestic pressure to stop throwing good money after bad and international pleas to boost Europe's crisis defenses.

The world's leading economies in the G20 piled pressure on Berlin at the weekend to drop opposition to a bigger European bailout fund, telling Europe it must put up extra money if it wanted more help from other countries.

European Commission President Jose Manuel Barroso added his voice on Monday, saying he expected a decision on strengthening the euro zone's financial firewall during March, although not yet at an EU summit on Thursday and Friday.

Merkel, whose country provides the lion's share of the emergency funds, first faced a struggle to avoid having to rely on opposition votes to pass a 130-billion-euro ($175 billion) rescue program for Greece, its second since 2010.

In a speech to the Bundestag (lower house), the chancellor acknowledged there was no 100 percent guarantee that the bailout would work, but she rebuffed calls from rebels in her centre-right coalition to let Greece default and leave the euro.

"Nobody knows what would be the impact of rejecting the second Greek aid package on the other bailout countries, Portugal and Ireland, or on Spain and Italy, or the entire euro zone and the world," she said.

"As chancellor I have to take certain risks, but I cannot be reckless - my oath of office forbids that."

She called for speeding up payments into a 500-billion-euro permanent euro zone rescue fund so it is fully capitalized within two years instead of five, but said her government saw no need to debate a bigger overall safety cushion now.   Continued...

German Chancellor Angela Merkel looks around during a guided walking tour of the northern German city of Stralsund February 24, 2012.  REUTERS/Morris Mac Matzen