German lawmakers back euro plan

German lawmakers on Friday approved their country's share of the massive rescue deal to save the euro and contain the debt crisis, as European Union (EU) finance ministers gathered in Brussels to create new budget rules to win back financial markets' confidence.

The lower house of parliament voted 319-73, with 195 abstentions in favour of the plan - sending it to the upper house, which represents Germany's 16 states and where Chancellor Angela Merkel's centre-right government currently controls a majority, for a decision later in the day.

The €750 billion (near US$1 trillion) package was drawn up two weeks ago.

Germany, Europe's biggest economy, is to contribute between €123 billion and €147.6 billion in loan guarantees. It comes hard on the heels of a separate package to rescue Greece - which was already unpopular with Germans.

"We have to put into effect what we have agreed, because markets will only trust when it is actually in effect," Finance Minister Wolfgang Schaeuble told lawmakers.

"The reality is that the markets look more at Germany than at Cyprus or Malta ... so it is right, in order to win markets' confidence, that we decide so quickly."

In Brussels, European Union president Herman Van Rompuy says most EU governments support tougher sanctions to punish countries that break debt and deficit limits.

The EU is discussing stronger debt rules in an effort to curb a debt crisis that has damaged market confidence in the euro currency.

The EU president said a Friday meeting of EU finance ministers showed "broad consensus" for financial and political sanctions.

He gave no details, saying European officials would decide on reforms to EU budget rules by October.

Merkel had called for lawmakers' approval on Wednesday, declaring that "if the euro fails, then Europe fails".

national interest

"We are not doing this out of generosity toward others; we are doing this in our own best national interest," Schaeuble said. "And this national interest means remaining integrated into a Europe growing further together."

Nearly two-thirds of German exports go to other eurozone countries, and "if we didn't have the common currency, we would have much less economic potential, less prosperity and less social security," he added.

Two opposition parties abstained and the third, the hard-left Left Party, voted against the measure.

Lawmakers rejected an attempt by some in the opposition to force a delay in the debate. The Greens argued that it was not necessary to vote on Friday and that parliament still needed to see more details.

The biggest opposition party, the Social Democrats, abstained on the grounds that separate undertakings given by Merkel to seek taxation of financial markets were not specific enough.

A senior lawmaker with the SPD criticised Merkel for not moving fast enough to regulate markets which many blame for worsening both the current crisis and the banking crisis of 2008.

"It is noticeable that we move at different speeds depending on whether it's about saving banks or calming nervous financial markets, or whether it's about defending citizens against these financial markets by regulating," Thomas Oppermann said.

Germany has pushed hard for aid to debt-laden European countries to be coupled with requirements to bring down deficits.

- AP