Austria approves euro rescue fund expansion

(VIENNA) - Austrian lawmakers approved Friday new powers for the 440-billion-euro ($590-billion) euro rescue fund, making it the 14th eurozone state out of 17 to do so.

In an extraordinary parliamentary session, 117 out of 170 MPs endorsed almost doubling Austrian guarantees in the European Financial Stability Fund (EFSF) to 21.6 billion euros, while 53 voted against.

Chancellor Werner Faymann's Social Democrats and coalition partners the Austrian People's Party were in favour, as were the Greens. The far-right opposition Freedom Party and the Alliance for Austria's Future were against.

"The developments of recent weeks are serious. The debt crisis is now not only touching the eurozone but all of Europe and the Western world," Finance Minister Maria Fekter said in parliament before the vote.

"I can assure you that with all the measures taken, no matter how hard they are, we are acting in the interests of Austria."

A four-hour debate, which at times was heated, had to be interrupted by the speaker of parliament at one point after repeated heckling by the far-right parties, one of which unfurled a banner calling for a referendum on the issue.

Freedom Party (FPOe) head Heinz-Christian Strache said that Greece should already have been ejected from the eurozone, likening the rescue fund to the "mass expropriations" of the Soviet Union.

"Austrians approved entry into the European Union in 1994 but Austrians never approved the entry of the euro or any rescue mechanisms," the far-right opposition politician said during the debate.

"You (the government) say you want to make the banks and the millionaires pay up but you are doing the exact opposite: you are protecting them."

Austria sparked market fears earlier this month after opposition parties prevented a parliamentary finance committee from debating the issue but the difficulties were overcome and the committee finally approved it this week.

The endorsement came a day after the rescue fund cleared a major hurdle when MPs in neighbouring Germany, the biggest contributor with 211 billion euros, eased market fears by voting overwhelmingly in favour.

The other members of the eurozone to have ratified by Friday were: Belgium, Cyprus, Estonia, Finland, France, Greece, Ireland, Italy, Luxembourg, Portugal, Slovenia and Spain.

Three still have vote: Malta, the Netherlands and Slovakia, with the latter seen as the biggest potential stumbling block as support among MPs is yet assured and no final date set yet for a decision.

When it was set up last year to bail out ailing members of the troubled currency union, the EFSF only had an effective lending capacity of around half the headline 440-billion-euro figure.

With Ireland and Portugal having already tapped it, and Greece set to get its second bailout, leaders agreed at a July summit to expand its scope and firepower, giving it new rights such as the ability to buy sovereign bonds.