* Opposition parties to help ensure Spanish aid approved
* Merkel faces dissent over liability of aid for Spanish
* Vote follows legal blow from Constitutional Court
By Annika Breidthardt and Madeline Chambers
BERLIN, July 18 Chancellor Angela Merkel faces a
test of authority within her centre-right coalition on Thursday
when the lower house of parliament votes on Berlin's
contribution to an up to 100 billion euro ($122 billion) aid
package for Spanish banks.
The Bundestag is almost certain to approve the rescue since
members of opposition parties will back the measures.
However, Merkel is fighting dissent from some of her own
conservatives and her Free Democratic (FDP) coalition partners
over fears that Spanish banks, rather than the Spanish state,
may become liable for the aid.
A major rebellion within her own ranks would be an
embarrassment for Merkel who only needs a simple majority to get
the law through but would prefer not to rely on opposition votes
for such an important piece of legislation.
"From the signals I am hearing, I feel optimistic," Merkel
told a news conference with her Thai counterpart on Wednesday.
Just over a year before the next federal election, Merkel is
riding high in opinion polls thanks largely to her tough stance
towards heavily indebted states in the euro zone crisis.
Many Germans are angry and frustrated at being the single
currency's paymaster and do not want their burden to increase
further to underwrite what they see as profligate euro zone
Germans are already bearing the brunt of bailouts to Greece,
Ireland and Portugal.
Merkel is also trapped between intense pressure from some EU
partners to move more quickly to stem the crisis and limits set
by German public opinion, parliament and the Constitutional
Court which has ordered the government give lawmakers more say.
In the latest legal blow, the court this week said it would
keep Europe waiting until early September as to whether Germany
can ratify the European Stability Mechanism, the euro area's
permanent bailout fund, and a fiscal pact on budget discipline.
Lawmakers' main objection to the up to package for Spain, of
which Germany would guarantee nearly 30 percent, is focused on
confusion over whether liability rests with the state or banks.
Critics of the bill insist national governments should be
liable for emergency loans granted to banks because otherwise
German taxpayers face greater risks.
Under the temporary European Financial Stability Facility
rescue fund, the vehicle initially used for Spanish aid, the
Spanish state will be liable, but this will change once the ESM
can recapitalise banks directly, a move discussed in the euro
zone now in conjunction with a pan-euro area banking supervisor.
FDP lawmaker Lars Lindemann, who opposed the ESM in a vote
in June, said he would vote 'no' again on Thursday because he
felt parliament had been rushed and also because Spanish banks'
owners should carry more of the cost.
"If we in Germany have to maintain a balance between actions
and liabilities then this should also apply to the owners of
Spanish banks," he told Reuters.
Merkel said on Sunday it had not yet been decided if the
EFSF and its permanent successor, the ESM, will be liable for
aid to banks in future.
Finance Minister Wolfgang Schaeuble was more explicit on
Wednesday. He told the Rheinische Post daily that any decision
to recapitalise banks directly from the rescue fund could only
happen once a central supervisory body was up and running.
Even then it would have to be unanimously agreed by euro
zone states and approved by the Bundestag, he said.
"The impression that has arisen through unclear and
irresponsible comments from some individuals that we are now
deciding on direct aid to banks without state liability is
simply absurd. It is completely unfounded," he told the paper.
Despite Merkel's professed optimism about the vote, she has
acknowledged she faces a rebellion from within her own ranks on
Thursday afternoon after a debate opened by Schaeuble at 1200
She has tried to lower expectations, saying on Sunday she
wasn't aiming to get the symbolically important so-called
"chancellor majority" which would require the support of 311 of
her coalition's 330 MPs in the 620-seat house.
In June, some 26 MPs from Merkel's coalition voted against a
bill on the ESM, even more than the 17 coalition MPs who
rebelled against the second Greek bailout package in February.