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Q&A-Germany's contribution to euro zone aid package


BERLIN, May 10 (Reuters) - Chancellor Angela Merkel said on Monday her cabinet aimed to push through quickly Germany's part of a $1 trillion emergency rescue package to stabilise the euro. The package -- 440 billion euros in guarantees from euro states plus 60 billion euros in a European instrument -- may prove another headache for Merkel, who has come under heavy fire for taking too long to approve aid to bail out Greece. Below are questions and answers about Germany's likely contribution to the rescue package, and parliamentary and legal obstacles Merkel faces to gaining approval for this: HOW MUCH IS GERMANY FORECAST TO CONTRIBUTE? Euro zone members are seen contributing to the guarantees according to their respective holdings in the European Central Bank capital. Based on this calculation, Europe's largest economy is seen contributing around 123 billion euros in guarantees to the package. However, government spokesman Ulrich Wilhelm on Monday said this sum could be greater, given that some euro countries that are fighting their own budget deficit problems may not contribute to the emergency fund. WILL THE GERMAN PARLIAMENT NEED TO APPROVE AID FOR GREECE? Yes. If states using German guarantees to back up loans then default on the latter, German taxpayer's money will be exposed, so the government plans to pass a law to approve the package. HOW LONG WILL IT TAKE FOR PARLIAMENT TO APPROVE THE AID? Merkel said the cabinet would meet on Tuesday to approve Germany's contribution and a law would be passed through parliament soon, although it was not clear if it would get fast-track parliamentary approval. "We don't need to pass the law in two or three days, we can conclude the consultations with a bit more time, quickly but thoroughly..." she said. Juergen Trittin, a leader of the opposition Greens, said he thought the law could not be approved before the start of June. HOW DIFFICULT WILL IT BE TO GET SUPPORT FOR THE AID? Opposition to the emergency fund is likely to be widespread in Germany, where a majority of the public disapproved of the Greece bailout plan due to fears of a rising budget deficit at home and indignation at bailing out another country. However, Merkel was firm in underlining the necessity of the package on Monday, saying it was necessary to defend the European common currency and that the guarantees would be linked to countries presenting strict budget consolidation programmes. Her centre-right coalition of conservatives and pro-business Free Democrats (FDP) has a clear majority in the Bundestag lower house of parliament, which could make approval a formality. Her coalition no longer has a majority in the Bundesrat upper house since losing an election in North Rhine-Westphalia on Sunday. But they could get support from opposition parties such as the Greens, who backed the Greek aid package. The main opposition party, the Social Democrats (SPD), has not indicated whether it would support the emergency euro package, but insisted the financial sector should participate in the costs of overcoming the euro crisis. Merkel may try to forge a plan on financial sector participation to gain the SPD's support. The SPD abstained from voting on the Greece aid package after failing to push through an addendum in support of a European financial transaction tax. WHAT ARE THE RISKS OF A LEGAL CHALLENGE? One of the academics who fought the Greek aid, eurosceptic economist Joachim Starbatty, said he might file a similar lawsuit against the European rescue plan. Starbatty, who with four others has tried to get Germany's top court to stop the Greek aid, said the package agreed in Brussels on Sunday limited the German parliament's scope to act. The previous complaint at the Federal Constitutional Court argued aid for Greece was not provided for in European Union treaties and could increase inflation pressures. It is unclear how long the court will take to decide on that complaint.

Some of the academics lost a challenge to the introduction of the euro currency and experts doubt they will have more success on the issue of aid for Greece.

(Reporting by Sarah Marsh, Dave Graham and Madeline Chambers; Editing by Toby Chopra) Keywords: EU GERMANY/AID (sarah.marsh@reuters.com; +49 30 2888 5226; RM: sarah.marsh.reuters.com@reuters.com) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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