By Andrea Thomas
BERLIN--Germany's parliament on Thursday backed plans to extend
Greece's bailout program by two months after Finance Minister
Wolfgang Schäuble said it would help stabilize financial
markets.
The plan, which has been drawn up by eurozone governments, would
give Athens extra time for talks with international creditors
beyond the first round of presidential elections that were held on
Wednesday.
Greece has received two successive international bailouts since
2010 worth a total of EUR240 billion, with the second one due to
expire on Dec. 31. The lawmakers gave Mr. Schäuble a mandate to
back negotiations over a precautionary credit line worth around
EUR10 billion for Greece once the current bailout program runs
out.
The surprise decision by Athens to bring forward presidential
elections to December from February has led to a slump in Greek
stock prices, with investors worrying that the move might cause
political instability and plunge the country back into turmoil.
"There is still uncertainty in financial markets, which to some
degree gets triggered by the domestic situation in Greece. and
increased over the past weeks," Mr. Schäuble told lawmakers.
"Therefore, it would be a stabilizing signal for all, for Greece,
for markets, for the eurozone as a whole if Greece meets its
commitments... and then a precautionary credit line were to get
decided under certain conditions."
He said backing from Germany would send "the right signal to
provide as many stabilizing signals as possible in this critical
phase."
The first round of presidential elections in Greece failed to
provide a winner with another vote due next week, fueling concern
that the Greek government might also collapse.
Mr. Schäuble said Greece is in better shape than many thought
possible a few years ago. Structural reform efforts have paid off
but more needs to be done, he added.
His comments come after Chancellor Angela Merkel told lawmakers
that the eurozone had improved from the height of the financial
crisis, but weak spots remain.
"We have this crisis under control, but we haven't yet overcome
it once for all," she warned. "We haven't reached our goal yet,
because the economic recovery remains fragile, mostly unemployment
and foremost that of young people, is in parts of Europe still far
too high and [because] the makeup of the economic and monetary
union has still weak spots."
International creditors are currently in talks with Greece over
further cutbacks to address Greece's public finances, but talks are
in a deadlock as the two sides disagree on the need for new budget
cuts and legislative measures.
Write to Andrea Thomas at andrea.thomas@wsj.com