• Germany edition
 
Constitutional Court approves euro rescue
Photo: DPA

Constitutional Court approves euro rescue

Published: 12 Sep 2012 10:29 GMT+02:00
Updated: 12 Sep 2012 12:33 GMT+02:00

"This is a good day for Germany, this is a good day for Europe," said Chancellor Angela Merkel in a speech to parliament after the keenly anticipated ruling.

In a landmark ruling watched around the world, the Constitutional Court overturned a raft of legal challenges aimed at preventing President Joachim Gauck from signing two crucial crisis-fighting tools into law.

Delivering a momentous decision with far-reaching implications for the euro's future, the eight scarlet-robed judges said Gauck could finally sign the European Stability Mechanism (ESM) and fiscal pact.

"The Second Senate of the Federal Constitutional Court has rejected the injunctions with the stipulation that a ratification of the ESM Treaty is only admissible if (certain conditions) can be guaranteed under international law," Chief Justice Andreas Voßkuhle said.

"Our examination has shown that the laws with a high probability do not infringe upon the German constitution. That is why we have rejected the injunction," he added.

The ruling came on a day of risks for the euro, which has enjoyed calmer times in recent weeks, as an anti-austerity party is seen likely to score big gains in Dutch elections and EU leaders unveiled plans for the first step towards a eurozone banking union.

It will come as an enormous relief to Chancellor Angela Merkel and her fellow European leaders as a rejection of the ESM would have triggered a fresh bout of chaos on financial markets and thrown the eurozone into a new political crisis.

The constitutional court specified that any financial burden for Germany arising from the ESM be strictly limited to its share of the fund's capital or €190 billion ($244 billion).

If the burden were to increase beyond that amount, then it could only be done with the express approval of the German parliament, and both the upper and lower houses must be kept fully informed, the court said.

The professional secrecy to which the fund's employees were bound "must not stand in conflict with the Bundestag and Bundesrat being comprehensively briefed," the statement said, referring to the lower and upper chambers.

The court also ruled that Germany must ensure a de-facto opt-out clause, if it felt its interests were not being considered.

"The Federal Republic of Germany must make it clear that it does not want to be bound to the ESM Treaty as a whole if any reservations it might have should prove ineffectual," Voßkuhle said.

The €500-billion ESM was set to replace the temporary European Financial Stability Facility (EFSF) and should have been in place by July 1.

But it needed Germany's share of the rescue money to function and had thus been held up pending the court ruling.

It is designed to come to the aid of debt-stricken countries such as Spain and Italy.

Technically, the court ruling was solely on whether to grant applications for temporary injunctions by eurosceptic politicians and groupings and delay ratification of both the ESM and the fiscal pact.

It will decide only at a later date whether the two are compatible with the German constitution, and that ruling could take several months yet.

Nevertheless, the court did provide some strong guidance as what that final ruling might look like.

The plaintiffs included the Left party, an initiative called More Democracy including 37,000 citizens and an outspoken critic from the Bavarian sister party of Merkel's conservatives, Peter Gauweiler.

They had argued that the ESM and the fiscal pact were incompatible with Germany's Basic Law because they irreversibly delegate national sovereignty to the European level and interfere with parliament's right to draw up budgets.

Moreover, this was all being decided without the necessary democratic backing, they complain.

But the court said such arguments were "unfounded". There was no such democratic deficit and the stability-orientated framework of currency union remained intact, it argued.

And "the possibility of setting up a permanent stability mechanism does not lead to a loss of national budgetary autonomy because the Bundestag has not yet transferred budgetary competence to organs of the EU or its institutions," it argued.

AFP/hc

The Local (news@thelocal.de)

Your comments about this article

11:01 September 12, 2012 by Zubair Khan
In current scenario a logical decision by the court. Will inject new blood to the sick body of euro zone countries. May also prove savior for the crippling Greece. Merkel Government must be relieved of immediate threat of Euro collapse.As a stop gap arrangement might be decision is OK and great but in the long run economists have to re examine their monetary and fiscal policies which are totally interest and capitalism oriented. These policies are not helping fair distribution of wealth and resources amongst needy human beings. Gap between haves and haves not is constantly widening. With such policies now danger can be avoided for indefinite time.
14:27 September 12, 2012 by delvek
In the long run, the EU is not possible. It remains incredible to me that the proping up with unaccounted funds continues.
16:53 September 14, 2012 by luckylongshot
Europe made a mistake agreeing to the Euro in the first place. It offered no obvious benefit as modern technology means trading in multiple currencies is not a problem. What it did was switch from a situation where the central bank could be forced to either give its profits to the state (America) or was owned by the state (Japan and China) to one where the Rothschilds benefit rather than European taxpayers.. Furthermore the Europeans are now on the hook in a very nasty game that seems to be heading towards taking control of countries away from elected officials and giving it to unelected bureaucrats. While I had hoped that the court would put a stop to more of this madness this was not the case and it was given a green light.

The last hope is that the people wake up to their looming enslavement and use their votes to put an end to it by electing anti Euro political parties
Today's headlines
Lufthansa pilot strike spills into second day
Photo: DPA

Lufthansa pilot strike spills into second day

In the second day of their strike, Lufthansa pilots have, as promised, extended their industrial action to include long-haul international flights until the end of Tuesday. READ  

Merkel tells allies to pay Ukraine's gas debts
Chancellor Angela Merkel in Bratislava, Slovakia, on Monday. Photo: DPA

Merkel tells allies to pay Ukraine's gas debts

Chancellor Angela Merkel on Monday called on Ukraine's allies to help the war-scarred nation pay off its gas debts to Russia, amid concern over gas supplies this winter. READ  

Steinmeier wants epidemic task force
Frank-Walter Steinmeier speaks at the World Health Summit in Berlin. Photo: DPA

Steinmeier wants epidemic task force

At the World Health Summit in Berlin, the Ebola crisis took centre stage at talks meant to create plans for how to handle future outbreaks. READ  

Nazi-stolen painting put on display, sort of
The Wiesbaden Museum in Hessen. Photo: DPA

Nazi-stolen painting put on display, sort of

The Wiesbaden Museum was once a collection house for art stolen from Jewish owners by the Nazi. With one painting, they hope to right at least one wrong while bringing awareness to its ongoing restitution work. READ  

JobTalk Germany
When should interns demand to get paid?

When should interns demand to get paid?

After a woman was denied pay for working at a supermarket as an 'intern' for eight months with no wages, The Local looks at the warning signs for abusive internships. READ  

Single parents, common law families on rise
Photo: DPA

Single parents, common law families on rise

The German family structure is changing, with nearly a third of every family no longer living in the "classic model" and big differences in what family looks like in the former East and West, statistics agency Destatis announced on Monday. READ  

Four arrested in raids against Isis
Photo: DPA

Four arrested in raids against Isis

Police raided 15 homes across Germany over the weekend and arrested four suspected supporters of the Islamic State (Isis). They are alleged to have smuggled a teenager and thousands of winter military clothes to the terrorist group's frontlines. READ  

Munich Refugee Crisis
'There's no room but we have nowhere else to go'
Hassan, pictured outside the Bayernkaserne with two of his children, arrived in Munich from Syria. Photo: Mariane Schroeder

'There's no room but we have nowhere else to go'

Around 300 refugees are arriving in Munich each day, but accommodation centres are full. With authorities struggling for answers, The Local meets those at the sharp end of the crisis. READ  

Train Strike
Buses up prices, football fans brawl, trains return
Photo: DPA

Buses up prices, football fans brawl, trains return

UPDATE: Deutsche Bahn trains are chugging along again after a 50-hour train strike cost the service "tens of millions" and brought travel headaches across the country, leaving millions of passengers struggling for transportation over the weekend as well as at least one mass brawl in its tracks. READ  

Foreigner toll to hit motorways only
Transport Minister Alexander Dobrindt. Photo: DPA

Foreigner toll to hit motorways only

Transport Minister Alexander Dobrindt plans to limit his road toll for foreigners initially to motorways only, Spiegel reported on Sunday. READ  

RECEIVE OUR NEWSLETTER AND ALERTS
Photo: DPA
Culture
Can you top our history quiz leaderboard?
Photo: Facebook
Society
German motorcycle gang joins Isis fight
Photo: DPA
Politics
UKIP ‘seeks EU pact’ with German satirical party
Photo: DPA
Travel
This is the man who has stopped Germany's trains
Photo: Shutterstock
Business & Money
Expats: Should I stay or should I go?
Photo: DPA
Gallery
PHOTOS: World's biggest erotic fair opens in Berlin
Photo: DPA/Shutterstock
Gallery
11 things Germans are afraid of...
Photo: Shutterstock
Business & Money
Which expat foods do you miss the most?
Sponsored Article
International School on the Rhine: a legacy
Photo: Shutterstock
Business & Money
How to get hired at a Berlin startup
Photo: DPA
Gallery
The ten richest people in Germany
Photo: DPA
Business & Money
JobTalk: All you need to know about working in Germany
National
Share news tips with The Local Germany
Sponsored Article
Bilingual education from nursery to graduation at Phorms
Latest news from The Local in Austria

More news from Austria at thelocal.at

Latest news from The Local in Switzerland

More news from Switzerland at thelocal.ch

Latest news from The Local in Denmark

More news from Denmark at thelocal.dk

Latest news from The Local in Spain

More news from Spain at thelocal.es

Latest news from The Local in France

More news from France at thelocal.fr

Latest news from The Local in Italy

More news from Italy at thelocal.it

Latest news from The Local in Norway

More news from Norway at thelocal.no

Latest news from The Local in Sweden

More news from Sweden at thelocal.se

3,464
jobs available
Toytown Germany
Germany's English-speaking crowd