Austria passes ESM, fiscal pact to combat euro crisis

(VIENNA) - Austria's parliament on Wednesday approved two key measures to combat the eurozone debt crisis despite opposition from far-right parties who charged they represent a power grab by Brussels.

The European Stability Mechanism (ESM), a new bailout fund due to come into effect shortly, was approved by a two-thirds majority, with support from the ruling Social Democrats and conservatives as well as the opposition Greens.

A eurozone fiscal pact, designed to limit debt and foster shared policies among the 17-nation bloc, was also passed.

Ahead of the vote, Chancellor Werner Faymann had urged deputies to look past party allegiance and support the measures.

"Only if we protect the European Union together, can we best protect Austria," he told MPs, likening the situation to a doctor who has the opportunity to intervene earlier rather than later to heal a sick patient.

Europe needs to "avoid a financial crisis like in the 1930s and we can only avoid this through a stronger commitment," Faymann went on, alluding to the crisis that helped propel the Nazis to power in Germany some 80 years ago.

"If we don't show responsibility beyond party allegiance ... and make sure this protection exists in Europe, then we don't have the right to say we are a common social, financial, peaceful and developed Europe," he added.

Finance Minister Maria Fekter described the ESM as "necessary," comparing it to "a highly modern fire department that will prevent local fires from turning into Europe-wide blazes" in the future.

"I can't imagine why one would be against such sensible measures," she insisted.

Far-right Freedom Party (FPOe) leader Heinz-Christian Strache however slammed the measures as an "empowering law" handing Austrian sovereignty over to Brussels.

The result of Wednesday's decision will be "the absorption of Austria into a centralising EU federal state, dominated by a financial dictatorship," he told deputies, attacking them for taking decisions over the head of taxpayers.

The far-right parties have long called for a referendum on major EU decisions.

Wednesday's vote came in the late afternoon as the FPOe and the smaller far-right Alliance for Austria's Future (BZOe) filed a range of additional motions to delay proceedings.

During the debate, MPs from both parties held up signs and wore badges on their lapels urging "Stop ESM."

The 500-billion-euro ($630-billion) ESM, which takes over from the European Financial Stability Facility (EFSF), will be able to recapitalise ailing banks directly without adding to the country's national debt.

The ESM will also be allowed to buy bonds on the secondary market, helping ease the pressure on struggling eurozone countries that must pay higher rates to borrow money, but this facility will be tied to strict conditions.

Austria's participation in the fund will amount to 19.5 billion euros.

The fiscal pact -- signed by all 27 EU members except for Britain and Czech Republic -- enshrines stricter budgetary rules aiming to prevent excessive public deficits and debt.