Germany is coming under mounting pressure from its EU partners and the IMF to allow a big boost to bailout rescue funding in return for the kind of budgetary discipline that Berlin says is needed.
Following press reports that Germany will now come on board, after many months refusing to increase loan financing, the government in Berlin did not deny movement on calls to add the remaining lending capacity of an existing eurozone fund to a new facility being launched in July.
The German government said "no decision" has yet been taken, while Wolfgang Schaeuble, in Brussels for talks with his fellow European Union finance ministers, said there was nothing to talk about on the issue "for now."
The debate, though, is fast gathering momentum ahead of a planned decision by EU leaders at a March 1-2 summit, by which time the treaty establishing the permanent European Stability Mechanism (ESM) is due to be signed.
"I think we can reach a consensus on the issue," said the usually well-versed Austrian Finance Minister Maria Fekter.
The temporary European Financial Stability Fund (EFSF) still has about 250 billion euros ($325 billion) in its coffers, and it still has a year to run after the entry date for its ESM replacement was brought forward by leaders.
The latter's effective lending capacity is to be 500 billion euros, although ministers agreed on Tuesday that this figure will be re-visited before the new fund comes into existence.
International Monetary Fund managing director Christine Lagarde, a former French finance minister who met with German Chancellor Angela Merkel this week in Berlin, is the leading voice calling for these two sums to be added together.
The overall rescue funding capacity should be "improved," effectively putting into one basket "the EFSF and the ESM," she told German public radio on Tuesday.
The 17-nation eurozone has agreed new loans worth 150 billion euros to the IMF, unofficially for the purposes of eurozone emergency funding, and the latter is calling on non-EU members, especially G20 states, to put all hands to the pump for fear of spillover effects amid recession this year.
Subtly, Lagarde made the point that if the eurozone wants China, the United States and other big IMF stakeholders including non-eurozone Britain to cough up, it could make further progress in its own funding.
A diplomat from a big non-EU state echoed that sentiment, pointing out that there remains "shedloads" of money available in the eurozone, even if the likes of Spain, back in danger with bad budget spillage, needed help.
If the eurozone countries did more, "IMF members would be more inclined to boost its resources," Lagarde said.
Italy's backing can be more or less assured; diplomats say France is moving towards offering more money despite domestic pressures as President Nicolas Sarkozy fights for re-election in May; and the European Commission and European Central Bank each support this approach.
"Reinforcing" the "financial firewall" has been a frequent refrain of EU economic affairs commissioner Olli Rehn, as Europe fights what he characterises as a "crisis of confidence" amid near-certain recession.
Having successfully imposed its model of budgetary rigour around Europe with a "technocratic" revolution in Greece, Italy and elswhere, Germany would start to look exposed if it did not match demands for widespread implementation of a so-called "golden rule" on budgets to a bigger safety net.
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