* SPD, Greens want to delay vote on fiscal pact
* Merkel needs two-thirds majority in parliament
* Coalition parties get behind firewall boost
By Noah Barkin and Matthias Sobolewski
BERLIN, March 27 Germany's main opposition
parties rejected on Tuesday plans by Chancellor Angela Merkel's
government to push a European pact on budget discipline through
parliament by June, saying more time was needed to complement it
with measures to bolster growth.
The pact, which aims to enshrine German-style fiscal rules
across 25 EU countries, requires a two-thirds majority in
parliament to pass, meaning Merkel is dependent on the
The chancellor's original plan was to link the vote on the
pact to legislation authorising Europe's new bailout facility,
the European Stability Mechanism (ESM), with both going to the
Bundestag lower house of parliament in May and the Bundesrat
upper house in June.
But opposition parties argue that Merkel has focused too
much on consolidating euro zone finances and not enough on
getting struggling countries such as Greece out of deep
multi-year recessions. They are pushing for additional
growth-friendly policies as a condition for approving the pact.
The Social Democrats (SPD) and Greens reacted angrily to
comments by Merkel's finance minister, Wolfgang Schaeuble, on
Monday evening where he effectively ruled out the introduction
of a financial transaction tax in the euro zone because of
opposition from other member states.
Both parties want such a tax to help finance growth-boosting
measures. They made clear on Monday that they did not consider
the transaction tax to be dead and saw no reason to approve the
fiscal pact according to the government's timeline.
"We think the pact needs to be complemented by a serious
initiative to tax financial transactions and strengthen growth
in Europe," Greens leader Juergen Trittin told Reuters after a
meeting of parliamentary leaders with Schaeuble.
"The pact needs to be approved by the end of the year. We
don't see any need to put this before parliament in May."
SPD parliamentary leader Frank-Walter Steinmeier, a possible
challenger to Merkel in next year's federal election, also spoke
of a delay, calling the government's timeline overly ambitious.
Their readiness to stand up to the government could herald a
more confrontational approach in the run-up to two key state
elections in May and the federal vote next year, in which Merkel
is widely expected to seek a third term.
German opposition parties and the Socialist frontrunner in
the French election, Francois Hollande, are all demanding steps
to bolster growth. Hollande has vowed to renegotiate the fiscal
pact if he defeats President Nicolas Sarkozy in the two-round
vote in April and May, although he has appeared to soften his
stance in recent weeks.
Growth-boosting measures could include so-called "project
bonds", possibly issued by the European Investment Bank, to fund
infrastructure projects in struggling euro zone states.
The German parties also want to use revenues from a
financial transaction tax to fund projects. Schaeuble said on
Monday that it would be impossible to implement such a tax in
the euro zone, let alone the broader EU.
He suggested that an enhanced stamp tax that covered
derivatives might be workable in the single currency bloc and
some additional EU countries.
Opposition parties have also criticised Merkel for not being
honest about an increase in the euro zone's firewall for
supporting struggling member states.
On Monday Merkel signalled for the first time that she would
be open to boosting bailout resources by allowing the ESM and
the fund it will replace, the European Financial Stability
Facility (EFSF), to run in parallel.
In addition to the 200 billion euros already committed to
Greece, Ireland and Portugal under the EFSF, unused funds in the
facility of 240 billion euros would remain available until
mid-2013, German officials told Reuters.
On top of that would come the 500 billion euro ESM, which is
to become operational this summer. The ESM is due to have a
lending capacity of 200 billion euros in its first year of
operation, gradually building up to its ceiling.
The shift in the German stance will mean that its guarantees
will rise from 211 billion euros to roughly 290 billion, a step
some of the parties in Merkel's coalition had previously said
they would not accept.
But Merkel appears to have won their backing for the move,
which Germany hopes will convince international partners like
Britain to step up their contributions to the International
Monetary Fund (IMF) and give the bloc more protection against
possible contagion to big countries like Italy and Spain.