German Court To Tackle Euro Debt Crisis

by
Reuters
Germany's top court will address on Tuesday whether Europe's new bailout scheme and budget rules are compatible with national law in a process influencing not just how to tackle the euro zone debt crisis, but how much deeper European integration can go.

Germany's top court will address on Tuesday whether Europe's new bailout scheme and budget rules are compatible with national law in a process influencing not just how to tackle the euro zone debt crisis, but how much deeper European integration can go.

Finance Minister Wolfgang Schaeuble and German central bank chief Jens Weidmann will attend the German Constitutional Court's public hearing (0800 GMT) into complaints about the European Stability Mechanism (ESM) and fiscal pact.

Apart from airing the arguments of eurosceptic politicians, academics and businesses, and the government view that the measures to tackle the euro zone crisis got legitimacy from parliament's approval in June, the hearing may indicate how long the court will keep Europe on tenterhooks.

Anything more than a few weeks would mean a serious delay to implementing the ESM, which has already been postponed from July 1, and raise serious doubts about whether Europe will really get the extra firepower it needs to combat the crisis.

The 16 judges in the southwestern city of Karlsruhe have a reputation of being a stone in the shoe of European integration, especially after they held up the Lisbon Treaty updating the European Union's constitution in 2009 to defend the role of the German Bundestag (lower house).

"The Bundestag must remain at the centre of political decisions, especially regarding its core competences such as responsibility for the federal budget," former Constitutional Court judge Udo di Fabio told news weekly Der Spiegel's Monday edition.

The court has chided Chancellor Angela Merkel's government repeatedly on this point since the sovereign debt crisis began just over two years ago, though it has never actually rejected any bailout itself - for Greece or other euro zone countries - as unlawful.

Court president Andreas Vosskuhle, who heads the eight-judge "senate" handling the ESM/fiscal pact case, has called this the "red line" running through all of the court's decisions on Europe.

Amid reports that Merkel is growing impatient with the court after taking on board its warnings to consult the Bundestag more fully, Germany's head of state said he supported the plaintiffs' rights to test euro crisis measures in court.

President Joachim Gauck - whose signature is needed to make ratification complete - made a rare incursion into the euro debate by saying he was "glad that this action is being taken".

 

SWALLOWING THE MYTH

Gauck, who was nominated by the opposition, told German TV the centre-right chancellor was "obliged to describe in detail the meaning, in fiscal terms too" of the debt crisis measures.

"Sometimes it's tiresome to explain what it's all about. And sometimes the energy is lacking to tell the population openly what is really going on," the popular president said on Sunday.

The main opposition Social Democrats (SPD) leant their votes on the permanent bailout mechanism and fiscal pact in return for growth and job measures. SPD chief Sigmar Gabriel was confident they were "in tune with the constitution", but echoed a widely-held feeling that any further steps to integration would require a referendum - a view the court in Karlsruhe might also express.

Merkel favours greater fiscal and political union providing Europe gets strong enough institutions to ensure that the errors that led to the sovereign debt crisis are avoided in future.

Constitutional Court president Vosskuhle is an avowed fan of a "federal Europe". But his former colleague Di Fabio said the currency bloc was in no shape for such projects now and that any federal state launched in such conditions would be "stillborn".

He questioned why so many politicians are talking about a plebiscite on a constitution dating from 1949 and defended by the court in Karlsruhe since 1951 which was designed to limit chancellors' power and prevent a return to Nazi-style tyranny.

"Perhaps many people are talking about a new constitution because they fear a Constitutional Court veto," he said. "Many swallow the myth that Karlsruhe is against more integration."

A surprising number of Germans express support for ceding more sovereignty.

They are set for a showdown with an increasingly vocal band of eurosceptics in Merkel's coalition and beyond, who are upset at what they see as concessions to Italy and Spain at the last EU summit on support for their banks and debt.