German court hears pleas against eurozone bailout fund

Posted by on Jul 10, 2012 | Comments Off on German court hears pleas against eurozone bailout fund

 

Germany’s Constitutional Court is hearing objections to the new EU permanent rescue fund, with petitioners hoping to block its introduction.

German lawmakers backed the European Stability Mechanism (ESM) in June, but President Joachim Gauck wants a court ruling before he will sign it into law.

A wide range of groups have asked the court to block the ESM and the EU’s new fiscal treaty on budget discipline.

The court has not yet said when it will make its final decision.

Judges might delay their ruling, pending a full hearing, the BBC’s Stephen Evans reports from Berlin.

The judges have previously ruled that the government must consult parliament more thoroughly before committing Germany to EU bailouts.

Just under two weeks ago, the German parliament voted to participate in the new 500bn-euro (£404bn; $635bn) rescue fund and to enshrine the fiscal treaty in German law.

The new measures are fundamental to the 17-nation eurozone’s efforts to tackle the debt crisis and stabilise the euro.

The ESM was supposed to start operating this month, but there have been ratification delays in several countries.

In Germany there are so many objections that the court in Karlsruhe will sit in a cinema to accommodate all the lawyers and participants.

The Left party (die Linke) argues that the fiscal treaty, which makes German spending dependent on revenue, has a clause saying it should never be rescinded – and it considers that to be unconstitutional. It also fears that the treaty would prioritise EU requirements for austerity over social programmes.

The German association of family businesses argues that the new rescue fund “threatens the constitutionally protected property rights of all German citizens” by giving Brussels power to spend their money.

All 27 EU states apart from the UK and Czech Republic accept the fiscal treaty – officially called the Fiscal Compact. It is due to take effect in January 2013.

The aim is to compel eurozone countries to respect budget rules and avoid incurring debts like those undermining the euro now.

Germany will account for 27% of contributions to the ESM, paying out 21.7bn euros in cash and providing guarantees worth a further 168.3bn euros.

Advertisement

Subscription

You can subscribe by e-mail to receive news updates and breaking stories.

————————Important———————–

Enter Analytics/Stat Tracking Code Here