A 50-strong group of German activists are trying to derail the creation of a European Stability Mechanism (ESM), an EU decision which would immortalise loans granted to troubled economies, like Ireland, Greece – and now possibly Portugal.
As EU leaders prepare to delete the euro zone's strict no bailout rule for failing economies, one German lawyer "is confident" that his country's top court will prevent any further rescues like the Greek and Irish packages.
"Those who spit on the rules governing European Monetary Union will lose eventually," Markus Kerber, an anti-trust lawyer who is leading the German legal effort, told an audience of policymakers in Brussels yesterday (12 January).
Kerber, who is leading a case filed by politicians and playwrights at the country's top court, believes EU leaders have breached citizens' fundamental rights and broken the euro zone's golden 'no bailout' rule.
Kerber's team believes that an EU rescue facility infringes property law as it requires taxpayers' money, which is set out as citizens' property in the German constitution.
The bailout facility and the European Central Bank's (ECB) recent purchases of sovereign bonds not only infringe the legal basis of the EU Treaties, but also distort competition in the bloc, argue the claimants.
As all eyes are now focused on a possible Portuguese bailout to follow Greece and Ireland, Kerber is part of a growing German grassroots movement against the common currency, dubbed a Tea Party-style group in the national press.
The group has launched increasingly acerbic criticism at EU leaders for underwriting bailouts.
German playwright Rolf Hochhuth, one of the anti-bailout activists, infamously said of the May 2009 Greek bailout: "Ever since Odysseus, the world has known that the Greeks are the biggest rascals of all time. How is it even possible – unless it was premeditated – for this highly popular tourist destination to go bankrupt?"
Kerber also controversially said he was "tempted" to seek an injunction against an imminent Portugese bailout and declared he would sooner kick failing economies out of the euro zone than prop them up.
"The Union should cover the costs of [currency] devaluation and servicing national debts and then say 'leave us in peace'," Kerber added.
The German case has received little attention in Brussels, although observers say that Germany's recent insistence on limited treaty change to justify an ESM was done to appease the Karlsruhe court.
The court famously showed its muscle when it examined whether the EU's Lisbon Treaty was in line with the country's basic law, Grundgesetz.
German diplomats in Brussels are reportedly unfazed by Kerber's case and find it unlikely that the constitutional court will rule in his favour.
Following the Greek debt crisis, the EU set up in May 2010 a European Financial Stability Facility (EFSF). The facility borrows cash on the market against up to 440 billion of joint eurozone government guarantees to help any eurozone member state that could not finance itself in the markets.
Rising costs of borrowing in Portugal, boosted by market uncertainty over its ability to reduce budget shortfalls and debt, fuelled speculation that Lisbon would eventually have to apply for EFSF help.
At a summit in October, France and Germany proposed setting up a permanent system to handle crises in the euro zone, admitting it would mean changing the EU treaties.
After the European Commission outlined details for a eurozone permanent strategy to help countries at risk of defaulting on their debts, EU leaders agreed in December to create a permanent financial safety net from 2013 and the European Central Bank moved to increase its firepower to fight the debt crisis that has rocked the euro zone.
- 17-18 Jan.: EU finance ministers to meet to discuss shape and size of European Stability Mechanism.