Germany urges swift court verdict over bailout fund
KARLSRUHE, Germany (Reuters) - Germany's top court agreed on Tuesday to examine complaints lodged against the EU's bailout fund and new budget rules but gave no date for its verdict, keeping investors on tenterhooks over the prospects for overcoming the euro zone crisis.
Finance Minister Wolfgang Schaeuble urged the Constitutional Court to reach a speedy decision and said any significant delay in approval of the anti-crisis tools would stoke financial market turbulence and erode confidence in the common currency.
"We are in a very serious situation. Nobody can predict what will happen," he told the eight red-robed judges at the end of a day-long hearing at the court in Karlsruhe, southern Germany.
Schaeuble, a keen proponent of greater European integration, said he did not want to put undue pressure on the court but added: "The alternative to stabilising the common currency is a breakup with consequences that are difficult to predict."
Legal experts and politicians had made clear that Tuesday's hearing would not deliver any verdicts in the complex case, but financial markets are anxiously seeking clear signs that the euro zone is getting on top of its long-running debt crisis.
Earlier, the euro fell sharply against the dollar and the Japanese yen as investors took fright at the risk of a lengthy legal process before Europe's largest economy can approve the bailout fund, the European Stability Mechanism (ESM).
The Finance Ministry put out a statement late on Tuesday expressing confidence that the court would eventually reject the complaints brought against the ESM and the fiscal pact and would also rule that they are in line with Germany's constitution.
"The fiscal pact and the European Stability Mechanism are important steps towards a European stability union. They are inseparable and this is a basic precondition for overcoming the crisis. They illustrate the principle that solidarity and solidity belong together," the statement said.
The plaintiffs, who include rebels from Chancellor Angela Merkel's centre-right coalition, contend that the ESM and the fiscal pact undermine Germany's budget sovereignty and overstep constitutional limits to European integration.
They hope their request to the court for an emergency injunction will prevent President Joachim Gauck from signing the ESM and fiscal pact into law, pending arguments on the substance of the legislation that could take many months. The president has said he will await the court's green light before signing.
Without German backing, the ESM, which was originally meant to start on July 1, then on July 9, cannot come into effect, a state of affairs that could quickly see several heavily indebted euro zone states pushed into bankruptcy.
The government hopes the court will decide within weeks to dismiss the request for an injunction.
It was not clear on Tuesday evening whether, in addition to examining the plaintiffs' petitions, the judges might also speed up their review - requested by the government itself - of whether the ESM and fiscal pact conform to the constitution.
During the hearing, the head of the court, Andreas Vosskuhle, raised the possibility of a "very thorough summary review" which could take two to three months, but he stressed that that was just one option facing the court.
"In politics, unusual situations and crises often require unusual measures," Vosskuhle, said, adding that the judges were aware of the wider implications of the case but also had to protect the plaintiffs' right to object to the ESM.
Schaeuble, putting the Merkel government's case, left the judges in little doubt about what is at stake.
"A considerable postponement of the ESM, which was foreseen for July this year, could cause considerable further uncertainty on markets beyond Germany and a considerable loss of trust in the euro zone's ability to make necessary decisions in an appropriate timeframe," Schaeuble said.
"Some member states of the euro zone would end up having further big problems financing themselves, which could raise questions over the stability of the euro zone as a whole."
Striking an even more sombre note, the head of Germany's central bank, Jens Weidmann, told the court even a swift ratification of the tools could not guarantee an end to the crisis.
"A temporary ruling does not ensure that the risks can be comprehensively limited. Conversely, a quick ratification is no guarantee the crisis will not escalate further," Weidmann said.
The government argues that the tools for tackling the debt crisis were given legitimacy by parliament's approval of them by a large two thirds majority in late June.
"The judges have to realise that the banking and debt crisis in Europe has put us in a situation that forces politicians into borderline decisions," said Helmut Brandt, a legal expert from the ruling coalition, urging the court to decide in two weeks.
But protesters outside the court argued that the bailout fund and fiscal pact ceded too much power to Brussels on core issues such as budgetary powers.
Candles flickered around a cardboard tombstone bedecked with flowers, with the epitaph: "Here rests in peace the constitution of the German republic, born on May 23 1949, died on 29th June 2012. The citizens mourn."
The Karlsruhe judges have a reputation for 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 Bundestag.
The court has chided Merkel's government repeatedly on this point since the sovereign debt crisis began more than two years ago, though it has never actually rejected any bailout itself - for Greece or other euro zone countries - as unlawful.
Merkel favours greater fiscal and political union, provided Europe gets strong enough institutions to ensure that the errors that led to the sovereign debt crisis are avoided in future.
(Additional reporting by Michelle Martin and Elisa Oddone, Writing by Gareth Jones; Editing by Giles Elgood and Alison Williams)
- Tweet this
- Share this
- Digg this
Trending On Reuters
The government plans to raise about 891.2 billion rupees ($14.4 billion) by reducing its stakes in state-run banks to 52 percent, the junior finance minister said on Friday, sending shares of state lenders higher. Full Article
Forever21 sets sights on Indian cities, but please hold the hot pants Full Article
Japan inflation slows in October, output and spending show signs of recovery Full Article