Top German court: euro bailout fund is kosher
AFP · 18 Mar 2014, 11:41
Published: 18 Mar 2014 11:41 GMT+01:00
- Euro rescue of €2 trillion 'an illusion' (24 Sep 12)
- Constitutional Court approves euro rescue (12 Sep 12)
- Constitutional Court mulls euro bailout fund (10 Jul 12)
Confirming a preliminary ruling dating from September 2012, the Federal Constitutional Court said it saw no obstacles to Germany taking part in the €500-billion European Stability Mechanism, set up to bail out troubled countries and their banks.
Nevertheless, in the ruling, presiding judge Andreas Voßkuhle insisted that it must be "the Bundestag [lower house of parliament] which retains sole responsibility over Germany's public income and spending, even with regard to its international and European commitments."
"As before, it is a matter of finding a way out of the crisis that is sustainable, realistic and has democratic and constitutional backing," Voßkuhle said.
Throughout the eurozone turmoil since 2010, eurosceptics repeatedly asked the Constitutional Court in the south-western city of Karlsruhe to rule on whether new EU crisis-fighting tools complied with Germany's constitution.
The red-robed judges have always validated European decisions, or sent them to a European court, while reinforcing the German parliament's right to be consulted.
The treaty establishing the ESM bailout fund contained an annex detailing this provision.
Germany's share of the ESM bailout fund amounts to €190 billion, more than that of any other country. Germany was one of the last countries in the region to ratify the rescue fund, in late 2012.
There had been no suggestion the court, which Chancellor Angela Merkel has always had to take into account in her decisions on European policy, would deviate from the line it had taken so far.
In a ruling last month, the court for the first time passed a case up to the European level, the Luxembourg-based European Court of Justice (ECJ).
At issue was the European Central Bank's OMT bond purchase programme, which eurosceptics had argued overstepped the central bank's mandate and was tantamount to printing money.
The Outright Monetary Transactions programme theoretically allows the central bank to buy up unlimited amounts of sovereign debt of crisis-ridden countries.
It was unveiled by ECB chief Mario Draghi in August 2012 and, although it has never been put into use, its mere existence largely defused fears of an imminent eurozone break-up.
Observers said the decision could be good for the euro because the ECJ as a European body was unlikely to overturn an anti-crisis measure that has been instrumental in restoring calm to the markets.
The EU Commission in Brussels welcomed the German court's move.