German court to check bailout fund

http://www.sxc.hu/

Germany's constitutional court said on Monday it would examine complaints against Europe's permanent bailout fund on July 10, a move that spells further delay to the scheme taking effect though the judges are not expected to block it.

Germany's parliament last Friday resoundingly approved the European Stability Mechanism (ESM), but President Joachim Gauck has said he will not sign it into law until the powerful constitutional court in Karlsruhe has given its go-ahead.

The bailout mechanism was originally meant to be implemented on July 1, then July 9, but it requires ratification by countries representing 90 percent of its capital base - meaning it cannot start functioning without Germany's rubber stamp.

It is not yet clear how long the court in Karlsruhe will take to deliberate.

Immediately after parliament voted on the ESM and Chancellor Angela Merkel's “fiscal compact” for European budget discipline on Friday, critics including the hardline left and conservative Peter Gauweiler filed complaints with the constitutional court.

“The ESM represents a coup against the constitution,” said Hubert Aiwanger, leader of the small Free Voters party from Bavaria which has also lodged a complaint and plans to compete in German federal elections next year on a Eurosceptic platform.

The court is widely expected to give the ESM the go-ahead, while also sending a clear signal on how much more European decision-making can occur without changes to the German constitution, which would require a referendum.

Justice Minister Sabine Leutheusser-Schnarrenberger said the ESM legislation took into account earlier rulings that demanded fuller consultation of parliament about emergency measures often decided upon by leaders in the heat of the euro zone crisis.

EUROSCEPTICS

Even Eurosceptics in the Merkel camp, such as the prominent parliamentarian from her own Christian Democrats (CDU) Wolfgang Bosbach, who voted against the ESM, said the court was likely to okay the bailout scheme after strong backing from parliament.

“The judges do indeed decide only according to legal and constitutional criteria, but they also know what kind of impact in terms of foreign policy and financial policy a categorical 'no' would have,” Bosbach told a regional newspaper.

But he echoed widespread sentiment that the court was also likely to tell the government: “So far, so good - but no further decisions” that require ceding further sovereignty to Europe without checking if new constitutional rules are needed.

German patience with bailouts for the likes of Greece is wearing thin, according to opinion polls. Media like business daily Handelsblatt are taking an increasingly harsh tone on what are portrayed as concessions by Merkel to France's new Socialist leadership and the governments of Italy and Spain.

“Checkpoint Europe, Achtung! You are now leaving the market economy sector”, read a headline in Handelsblatt on Monday, fuming at the summit's decision to make it easier to bail out banks in the euro zone via the ESM.

Finance Minister Wolfgang Schaeuble has added his voice to a chorus of policymakers who argue that a referendum is needed to give legitimacy to further political and fiscal union in Europe, which would require ceding more powers to Brussels.

Calling a referendum would be a risky ploy in Germany, where Adolf Hitler gave plebiscites a bad name in the 1930s.

It would also risk clashing with, or dominating, the 2013 elections when Merkel is expected to seek a third term as chancellor. - Reuters