German court seen approving EU bailouts, with conditions

German Constitutional Court.jpg

The German Constitutional Court in Karlsruhe will deliver on Wednesday (7 September) at 10 a.m. its ruling on the country's participation in the billion-euro bailout of Greece and the European Financial Stability Facility (EFSF). EURACTIV Germany reports about the expected verdict.

The Karlsruhe Court's ruling will have a direct impact on the reform of the EFSF agreed at a special eurozone summit on 21 July.

Experts expect the Court to approve the government's participation in the Greek and Irish bailouts, but will establish additional requirements regarding involving the parliament in similar decisions in the future.

A group of Eurosceptics around conservative MP Peter Gauweiler (CSU) filed a constitutional complaint with regard to the country's participation in the multi-billion-euro bailouts in May 2010. The oral hearing took place in July 2011.

MP Michael Stübgen, European affairs spokesman for the CDU/CSU group, told EURACTIV Germany in an interview that "as regards to the Court's ruling on 7 September parliament's control over EFSF instruments has to be strengthened".

The parties in Germany's coalition – the conservative CDU/CSU and the liberal FDP – agreed last week on a multi-level approach to involve the German Bundestag in future EFSF decisions. The main idea is that the government needs parliament's approval before it can agree in Brussels on new EFSF rescue packages, but will have an extended margin to decide on technical implementation of EFSF decisions.

The coalition has announced its intention to bring opposition parties the SPD (Social Democrats) and the Greens on board, but will negotiate the final agreement on parliament's participation rights only after the court's ruling.

MP Michael Roth, spokesperson for European affairs at the opposition SPD, told EURACTIV Germany in an interview that he expects a "parliament and Europe-friendly decision".

The German Bundestag is expected to decide on 29 September on the extended EFSF. The Bundesrat, Germany's second chamber of the federal states (Bundesländer), is expected to decide in an extraordinary session that day or the next.

In the meantime, economics professor Wilhelm Noelling, one of the plaintiffs to Germany's Constitutional Court, said the euro could only be "made functional by limiting it to a maximum of seven strong countries".

"The other countries should recognise the beauty and efficiency of individual made-to-measure solutions and/or alliances and reclaim them for themselves," he said, quoted by Reuters.

 

At the height of the Greek debt crisis, the EU set up in May 2010 a European Financial Stability Facility (EFSF).

It allows to borrow cash on the market up to €250 billion against up to €440 billion of joint eurozone government guarantees to help a eurozone member state that cannot finance itself on the markets. The instrument is already being used to lend money to Greece and Ireland.

At a summit in October, France and Germany proposed setting up a European Stability Mechanism (ESM), a permanent system to handle crises in the euro zone, admitting it would mean changing the EU treaties.

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