France, Germany pave the way for new EU-bailout fund, Malta to follow ‘soon’

France yesterday became the first eurozone member state to approve a second bailout for Greece and an increase in the European Financial Stability Facility, while the German courts cleared the way for the eurozone’s largest economy to participate in the process.

Malta is currently preparing the necessary procedures so that Parliament can discuss and approve this agreement as soon as it convenes next month following the summer recess. Finance Ministry sources yesterday told The Times Business Malta is closely following the developments in the eurozone and is actively participating in the finalisation of the July deal in Brussels.

“As soon as all the preparatory legislation is ready, we intend to present it to parliament so that it is discussed and possibly approved,” the sources said.

Last July, Malta gave its consent to a new bailout deal for Greece, worth €159 billion following a first €110 billion injection in 2010.

Malta will not have to fork out any new money to this second deal with Athens as it will be financed through a €750 billion bail-out fund agreed by the eurozone and the IMF.

In the first deal, Malta had agreed to lend Greece €75 million on a bilateral basis. Last July it has also agreed to guarantee €400 million as its part on the new financial stability facility.

Following the approval in Paris, the French economy minister, François Baroin, said that France trusted the Greek government to implement the economic plan needed to win support from Europe and the International Monetary Fund.

At the same time, he said that there is political consensus in France about the fact that Greece has to be backed and the EFSF needs more teeth.

Along with the rapid implementation of the decisions taken in July, the European Commission is currently putting pressure on the Council of the EU and the European Parliament to finalise the talks on changes to the Stability and Growth Pact, which are in deadlock over decision-making in the SGP’s crisis prevention aspects.

The Commission had unveiled the draft legislation a year ago.

Meanwhile, a German court yesterday dismissed a claim by a group of eurosceptic academics and economists who argued that Germany’s contribution was in breach of the country’s constitution.

In its ruling, the court said that the decision to take part in the bail-out and the rescue fund were in line with the constitution. At the same time it emphasised that the Bundestag’s (German Parliament) budgets committee should have a greater say over future decisions to help eurozone countries.

Germany’s highest court argued that that legislation implementing EU law into German national law was “compatible” with Germany’s constitution and that the principle of democratic control of decision-making by the Bundestag had been maintained.