Greens write off debt brake accord

Greens chairwoman Eva Glawischnig has claimed the government stopped being interested in adding a debt brake to the constitution.

Social Democratic (SPÖ) Chancellor Werner Faymann and Vice Chancellor Michael Spindelegger of the conservative People’s Party (ÖVP) announced in November they agreed on establishing a constitutional debt limit. The government leaders said the measure should help to regain the trust of the financial markets in the Austrian economy in difficult times.

At least one of the parliament’s three opposition factions must pass a draft bill presented by the government coalition to make laws constitutional. SPÖ and ÖVP have met with representatives of the Green Party, the Freedom Party (FPÖ) and the Alliance for the Future of Austria (BZÖ) of Josef Bucher several times in the past weeks to win their support.

The coalition passed the debt brake as a regular law in December but promised to keep fighting for a two-third majority in parliament to upgrade the restriction and make it a constitutional measure. Now the head of Austria’s Greens said Social Democrats and ÖVP lost their interest in creating a debt brake bill the opposition may endorse.

Glawischnig told radio channel Ö1 today (Tues) it seemed to her that the Austrian government abandoned its attempts to add the law to the constitution after the most recent summit of European Union (EU) decision-makers. The EU’s state and government leaders met to discuss details of the planned EU-wide federal debt brake accord. They eventually agreed that passing regular laws would be sufficient – a decision which was widely seen as one step back compared to initial ambitions to introduce constitutional debt limits in all 25 participating nations.

The leaders of the EU members’ governments started cooperating over debt reduction following the increasing pressure by economists and financial market businesspeople. Analysts demanded a strong signal as a rising number of politicians admit that a bankruptcy of Greece could not be ruled out anymore. Former SPÖ Chancellor Alfred Gusenbauer stressed at the weekend he was “not a supporter” of the option that Greece could be asked to leave the Eurozone. Some experts think that such a move could help the struggling country recover economically. They also argue that a Greek exit would shield the rest of the EU from worse negative effects caused by Greece’s rising debts.

“I don’t approve this thesis. Inflation would be the consequence,” Gusenbauer said about a possible Greek departure from the Eurozone and the consequences for its people. Asked by the Kurier which sectors the EU should focus on when it comes to making investments in debt-stricken member countries like Greece and Portugal, the ex-SPÖ chief named infrastructure, renewable energy and education.

Gusenbauer, who headed a government coalition of SPÖ and ÖVP between 2007 and 2008, warned: “The trust of the markets would be significantly shattered if Greece is asked to leave the Eurozone. The dominating question would be: Which country could be next? (…) Debating a possible exit of Greece is like playing with fire. (…) Suggesting a Greek bankruptcy is infantile.”

SPÖ and ÖVP plan a savings package to lower the Republic of Austria’s debts to 60 per cent of the gross domestic product (GDP) by 2020. The country’s debts were as high as 72.2 per cent of GDP last year. Government officials claimed that final results of the negotiations could be presented later this or next week. Social Democrats and ÖVP must agree on details of the austerity package shortly if they want to make the measures effective from April.

SPÖ Vienna Mayor Michael Häupl stressed that wasting time would be regrettable but also warned from rushed decisions. Häupl said on Sunday that it would not matter if the savings package agreement was achieved one or two weeks behind schedule. “I don’t understand the excitement of the past weeks. (…) The measures must guarantee social fairness,” he added.