Chancellor Angela Merkel's Cabinet approved legislation on Monday that would give Greece 22.4 billion euros ($29.6 billion) over three years as part of a wider bailout, as the German government acknowledged that letting Greece go bankrupt could send the euro into a tailspin and hurt Germany's own economy. “It doesn't only mean that we help Greece, but that we stabilize the euro as a whole, which helps people in Germany,” said Merkel, who, along with Germany, had been battered by critics for dragging its feet on any decision until Greek bonds were relegated to junk status last week. The remark was a nod to the popular discontent in Europe's biggest economy about having to pay so much to help a fellow European Union country that many Germans feel has been fast and loose with its finances for years. The European Central Bank, meanwhile, suspended its rating limits on Greek debt. Both moves were mandatory after European governments and the International Monetary Fund agreed Sunday to give 110 billion euros ($145 billion) in loans to Greece over three years. The loans came after Athens adopted a new round of austerity measures that provoked fresh uproar among Greek workers. IMF officials say Greece could start receiving money from the rescue package in about a week. Germany would contribute 8.4 billion euros ($11.1 billion) for the first year of the bailout this year, followed by ¤14 billion ($18.5 billion) over 2011 and 2012, or 28 percent of the overall package. The money would come in the form of credit extended to Greece from KfW Development Bank, which is backed by the German government. The draft law backed by the Cabinet will be debated by both houses of parliament, and Mekel wants have it approved before she heads to Brussels on Friday for an EU summit on Greece. The bill is expected to pass. Merkel's government had insisted on the latest Greek austerity package before it would move to free up aid. Her party faces a crucial regional election Sunday in North Rhine-Westphalia, Germany's most populous state, and many German voters are angry that their taxes are being used to bail out Greece while Germany itself struggled through years of budget-tightening to stimulate its own economy. The election could affect the makeup of the upper house of Parliament and set the tone for future votes. France will contribute 20.7 percent of the total or ¤16.8 billion over three years, at a fixed rate of 5 percent, French Finance Minister Christine Lagarde told Le Monde, saying the rate of interest is equivalent to the 3.75 percent variable rate charged by the IMF. The rate is above the 1.5 percent that France borrows at, a reflection of the risk, she said. Finland will pay ¤1.6 billion. Lawmakers there are expected to vote on the package within a week and likely to approve it since the center-right coalition government has a clear majority in Parliament. Greece announced more austerity measures on Sunday worth 30 billion euros ($40 billion) through 2012 - including public service and pension pay cuts and higher taxes.
