Germany and Italy authorized huge rescue package for debt-laden Greece on Friday. German lawmakers approved the country's share of the rescue package for debt-laden Greece after a debate in which the finance minister told them they had no alternative to the unpopular measure. The lower house of parliament voted 390-72, with 139 abstentions, to authorize granting as much as ¤22.4 billion ($28.6 billion) in credit over three years. That is part of a wider ¤110 billion package backed by euro zone members and the International Monetary Fund Chancellor Angela Merkel's center-right governing coalition was joined by one of the three opposition parties in approving the aid. Germans dislike the idea of rescuing another country from its financial irresponsibility. The German Finance Ministry said a group of German banks and other financial companies have agreed to provide ¤8.1 billion ($10.3 billion) in financing to Greece. The ministry said in a statement Friday that the commitment is a follow-up on a public pledge made Tuesday by Deutsche Bank AG and other companies to help Greece weather its financial crisis. The ministry said the companies will provide ¤4.8 billion in financing to replace Greek bonds expiring by May 6, 2013, and ¤3.3 billion for lines of credit that expire May 6, 2010 until at least May 6, 2013. The upper house of parliament, which represents Germany's 16 states where Merkel's government also has a majority, was expected to add its approval later Friday. “We have to make this decision and we have no better alternative,” Finance Minister Wolfgang Schaeuble told lawmakers ahead of the vote. “Any other alternative would be much more expensive for the Germans, would be much more dangerous, would carry much bigger risks.” Schaeuble said central bankers and the IMF agree “it would be disastrous to risk ... a member of the European currency union, Greece, now becoming insolvent.” “This is about defending the common European currency as a whole, and with it we are defending the European project,” Schaeuble said. “The situation is very serious and no one can make out that we are already out of the woods with today's decision,” Foreign Minister Guido Westerwelle said. “What is important now is that we must extinguish the fire so no brush fire spreads in Europe, and we must at the same time fight the cause of the fire.” Bailing out Greece is unpopular in Germany, which has Europe's biggest economy. Merkel long took a tough line on aid, and opponents have accused her of dragging her heels ahead of a regional election this weekend. Sigmar Gabriel, the leader of the biggest opposition party, charged that Merkel had “destroyed trust in the credibility of Germany's European policy.” Gabriel's Social Democrats abstained. They had hoped to couple the vote with a call for a tax on financial market transactions - which Schaeuble described as unrealistic, given a lack of international support. The Greens, also in opposition, voted in favor. But the hard-left Left Party objected to the rescue package on the grounds it would make things worse for Greece. Left Party lawmaker Gesine Loetzsch described the austerity package to be implemented in Greece as “brutal” and accused German leaders of doing too little to control markets. “Speculators are Taliban in pinstripes, and people in our country must be protected from these Taliban,” Loetzsch said - a remark that drew a rebuke from speaker Norbert Lammert. Moreover, the Italian government ministers on Friday approved an emergency decree authorizing up to ¤14.8 billion ($18.8 billion) in rescue loans for debt-ridden Greece. The measure is part of Europe's efforts to “safeguard the financial stability of the euro zone,” according to a government statement. Italy will raise the money through a series of medium- and long-term treasury bonds. The measure includes an initial tranche of ¤5.6 billion. The decree needs parliament's approval, considered a formality, within 60 days. Finance Minister Giulio Tremonti told parliament on Thursday that the measure will not affect Italy's deficit but rather its debt, because it is a loan. Italian officials have been staving off concerns of contagion from the Greek crisis, emphasizing that the Italian banking system is robust, that overall debt is low and savings are high. Portugal OKs assistance Moreover, the Portuguese parliament on Friday backed the government's participation in an EU-IMF rescue package for Greece at a time when Portugal too is confronting severe economic difficulties. The vote, supported by MPs from both the left and the right, will enable Portugal to join its eurozone partners in providing emergency loans to Greece to help it meet its debt obligations. The measure was opposed by the Green and communist party deputies. Portugal's contribution to the three-year 110-billion-euro ($140 billion) bailout will come to 2.064 billion euros. “Europe has a duty to show solidarity with other members of the eurozone,” said treasury secretary of state Carlos Costa Pina. The package is expected to receive final approval at a special eurozone summit later Friday. Struggling with tepid growth and a substantial public deficit Portugal is seen as vulnerable to the sort of crippling speculative market pressure that has hobbled Greece.
