President Gauck delays EU bailout approval

German President Joachim Gauck will delay approving German participation in the EU fiscal pact and new bailout fund, his office said on Thursday after the top court said it would need more time to examine a likely legal challenge.

President Gauck delays EU bailout approval
Photo: DPA

Lawmakers are due to ratify both tools for fighting the eurozone’s debt crisis on June 29 but the president’s decision now undermines the European Stability Mechanism (ESM) bailout fund’s planned entry into force on July 1.

The constitutional court earlier announced it would need up to three weeks to consider a threatened challenge by the far-left Linke party and would ask Gauck to postpone signing off on the legislation.

It came hours after a hard-fought accord was reached following weeks of wrangling between the governing centre-right coalition and main opposition, whose support Chancellor Angela Merkel needs to ratify the pact and rescue fund.

The German parliament must pass the draft laws on the fiscal treaty, a new European budgetary rule book, with a two-thirds majority, meaning Merkel needed to secure opposition backing.

The final compromise includes measures for growth and employment and backing for the introduction of a tax on financial transactions.

The government wanted to ratify both the fiscal pact and the ESM in one fell swoop before the start of the summer recess on July 6.

The ESM cannot come into effect without the ratification of Europe’s biggest economy.

Designed as a successor to the EU’s current bailout fund, the ESM will have €500 billion to help struggling eurozone countries deal with the debt crisis.


Member comments

Log in here to leave a comment.
Become a Member to leave a comment.


Paris, Berlin agree on future eurozone budget: French ministry source

France and Germany have agreed on the broad outlines of a proposed eurozone budget which they will present to EU finance ministers in Brussels on Monday, a French finance ministry source said.

Paris, Berlin agree on future eurozone budget: French ministry source
French Economy and Finance Minister Bruno Le Maire (R) and German Finance Minister and Vice-Chancellor Olaf Scholz. File photo: AFP

The common single-currency budget was one of French President Emmanuel Macron's key ideas for protecting the euro, but it caused differences between France and Germany, the region's two largest economies.

French Finance Minister Bruno Le Maire and Germany's minister, Olaf Scholz, will “jointly present a proposition on Monday… about the layout for a budget for the eurozone,” the ministry source told AFP.

“It's a major step forward,” the source said. “We will look forward to sharing with other members.”

The source said the amount of the budget has not been established as the proposal was to first set out the “architecture and main principles” of the budget.

According to a copy of the French-German proposal, the budget would be part of the EU budget structure and governed by the 19 euro members.

Macron will travel to Berlin at the weekend to meet with German Chancellor Angela Merkel where the two leaders will bolster their alliance as champions of a united Europe.

READ ALSO: France and Germany push for compromise on eurozone reform