Germany's Merkel To Face Down Party Rebels In Greek Bailout Vote
"The government is in a real quandary."
BERLIN, Aug 15 (Reuters) - In a major test of her authority, Chancellor Angela Merkel will ask skeptical German lawmakers to back an 86 billion euro ($95.5 billion) bailout for Greece on Wednesday despite uncertainty over whether the IMF will play a role in the rescue.
Parliamentary approval is not in doubt because the Social Democrats (SPD) and Greens are expected to back the deal. But the vote could expose a deep divide among Merkel's conservatives, damaging the German leader and her close ally Volker Kauder, the head of her bloc in parliament.
Kauder, who incensed fellow lawmakers last week with threats of retaliation if they rebelled and voted against a bailout, has described the involvement of the International Monetary Fund as a "condition" for the support of his party.
However under the bailout approved by euro zone finance ministers at a meeting in Brussels late on Friday, it is unclear whether the IMF will end up playing a role.
IMF Managing Director Christine Lagarde told the ministers by telephone that she could not commit until her board reviewed the situation in the autumn.
She renewed a call for "significant" debt relief for Greece, a demand Merkel's government has repeatedly pushed back against.
German Finance Minister Wolfgang Schaeuble reiterated his opposition to an outright writedown of the face value of Greek debt in an interview with Deutsche Welle published on Saturday. He said the scope for milder forms of debt relief, like extending debt maturities, was "not very big."
The IMF took part in the first two rescues for Greece, which totalled 240 billion euros, and Berlin is keen to keep it on board because of the Washington-based institution's reputation for rigor.
RISK OF BIG REBELLION
Last month, a record 65 lawmakers from Merkel's conservative camp broke ranks and refused to back negotiations on the bailout.
Far more could rebel in Wednesday's vote, with top-selling German daily Bild estimating that up to 120 members of her Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), may refuse to back the government.
The Bundestag debate on Greece is scheduled to start at 9 a.m. (0700 GMT) on Wednesday, disrupting Merkel's travel plans.
She had been scheduled to leave on a government trip to Brazil around that time. Her spokesman Steffen Seibert said the departure would be delayed by several hours.
Merkel will also move forward to Monday a planned trip to Milan.
She had been due to travel there for talks with Italian Prime Minister Matteo Renzi on Tuesday, but will now stay in Berlin that day to lobby conservative lawmakers on the bailout.
If 100 or more of her conservative allies rebel in the vote it would be seen as a major political setback for the chancellor, who remains highly popular after 10 years in office.
"The government is in a real quandary," said Greens leaders Katrin Goering-Eckardt and Anton Hofreiter in a statement. "It can't demand IMF involvement and at the same time refuse its demands for debt relief."
A large rebellion would be an even bigger danger for Kauder, whose threat last weekend to sanction lawmakers who voted against the bailout by removing them from key parliamentary committees appears to have backfired, firing up the "No" camp.
Senior Merkel allies Ralph Brinkhaus and Eckhardt Rehberg tried to put a positive spin on the Greek deal, noting that Schaeuble had won concessions on privatizations and that the first tranche of aid, at 26 billion euros, would be smaller than initially planned, keeping Athens on a tight leash.
"What the IMF is saying about its future involvement is positive - even if it isn't ready to commit until the autumn," they said.
But Bild asked in a full-page spread: "How dangerous is it getting for Merkel?". The paper said it would be a "political catastrophe" for her should she fail to get a majority of her 311-strong conservative bloc in parliament to back the deal.