UPDATE 2-German FDP eurosceptics lose party vote on euro

Fri Dec 16, 2011 8:19am EST

* Coalition party votes on euro bailout scheme

* Eurosceptics fail to get majority or quorum

* Doubts remain about Merkel coalition partner

By Stephen Brown and Annika Breidthardt

BERLIN, Dec 16 (Reuters) - Eurosceptics in Germany's Free Democrats lost an internal vote on a permanent euro zone bailout scheme, the leader of the coalition party said on Friday, removing a threat to Chancellor Angela Merkel's leadership and European policy.

"The FDP remains clearly focused on a pro-European stance," party leader Philipp Roesler said, adding that a failure to meet the quorum of a third of party members made the referendum questioning the European Stability Mechanism invalid.

A majority vote against the ESM could have prevented the Free Democrats from backing Merkel on crucial euro issues and even brought down her coalition, bringing forward the 2013 elections at a time when the opposition centre-left looks a real threat to her.

Roesler, 38, appeared to have narrowly averted a threat to his own leadership, only half a year after taking over from unpopular Foreign Minister Guido Westerwelle.

The turnout fell just short of a quorum with nearly 32 percent of party members voting, while FDP backbencher Frank Schaeffler got 44.2 percent support for his anti-ESM motion.

"We hope the FDP leaders recognise how close this result was," said a statement from eurosceptics Schaeffler and Burkhard Hirsch, who say bailouts risk creating a "transfer union" where German taxpayers underwrite less disciplined states like Greece.

The FDP has been a liability for Merkel since helping her to a second term with its record performance in a 2009 election.

Its unpopular leaders and failure to deliver on promised tax cuts have dragged the party below the 5 percent threshold needed to win seats in the Bundestag, the lower house of parliament.

Roesler's even younger second-in-command resigned just two days ahead of the results of the vote on the ESM, underscoring tensions in the party about the scheme which euro zone leaders plan to roll out a year ahead of schedule in mid-2012.

CRACKS IN COALITION

Gero Neugebauer, a political scientist at Berlin's Free University, said the FDP internal vote was really "a vehicle for expressing dissatisfaction at the party" and that this explained the high proportion of votes for the rebel backbenchers.

The opposition Social Democrats (SPD) and Greens said however the vote showed the FDP still had a leadership crisis and undermined Merkel's authority for leading the euro zone out of crisis.

"You can't run a country with such a crumbling majority in times like these, that's the bad news for Frau Merkel from this vote," said Greens parliamentary leader Juergen Trittin.

Merkel's conservative Christian Democrats (CDU) and their Bavarian sister party, the CSU, are unlikely to renew the alliance with the FDP -- known as the Liberals -- in 2013. The question is whether the coalition can survive until then.

"I am counting on the agreement between the conservatives and the FDP being respected by both sides for the rest of this legislature up to 2013," said Michael Meister, deputy leader of the conservatives in parliament, before the result was known.

Merkel's allies have warned her not to assume easy passage through parliament of decisions taken last week at a European Union summit, such as handing over some budget sovereignty to Brussels and moving up the launch of the ESM.

In September Merkel narrowly survived a crunch vote in parliament pushing through changes to the ESM's predecessor, the European Financial Stability Facility (EFSF), even though 14 MPs in her centre-right coalition voted against it.

The coalition has other problems, too. The man Merkel made head of state last year, a CDU ally, is embroiled in a home-loan scandal that has hurt his image and could damage her authority.

German President Christian Wulff has come under fire over accusations he misled lawmakers about a private 500,000-euro ($650,000) loan which he obtained on special terms from the wife of a wealthy businessman friend.

Wulff said on Thursday he regretted not telling the regional parliament in Lower Saxony, the state he used to run, all the details of his loan.

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