Andreas Vosskuhle (2nd left), President of Germany’s Constitutional Court (Bundesverfassungsgericht), pronounces the verdict on the ESM with his colleagues of the second senate, at the constitutional court in Karlsruhe, yesterday.
KARLSRUHE: Germany’s highest court yesterday ruled once and for all that the European bailout fund is in line with the country’s constitution, throwing out a raft of objections by eurosceptics.
Confirming a preliminary ruling from September 2012, the Federal Constitutional Court issued its final judgement, saying it saw no obstacle to Germany taking part in the €500bn European Stability Mechanism (ESM), set up to bail out troubled countries and their banks.
“The constitutional complaints ... lodged against the establishment of the European Stability Mechanism ... are partly inadmissible and for the remainder unfounded,” the court ruled.
“Despite the liabilities assumed, the budgetary autonomy of the German Bundestag is sufficiently safeguarded,” it said.
Nevertheless, presiding judge Andreas Vosskuhle insisted that the Bundestag or lower house of parliament must “remain the place in which autonomous decisions on revenue and expenditure are made, including those with regard to international and European liabilities.”
“As before, it is a matter of finding a way out of the crisis that is sustainable, realistic and has democratic and constitutional backing,” Vosskuhle said.
Throughout the eurozone turmoil since 2010, eurosceptics have repeatedly asked the Constitutional Court in the southwestern city of Karlsruhe to rule on whether new EU crisis-fighting tools comply with Germany’s constitution.
The red-robed judges have always validated European decisions, or sent them to a European court, while reinforcing the German parliament’s right to be consulted.
Germany’s share of the ESM bailout fund amounts to €190bn, more than that of any other country. Germany was one of the last countries in the region to ratify the rescue fund, in late 2012.
Finance Minister Wolfgang Schaeuble welcomed the ruling, saying it would “boost confidence and strengthen credibility.”
In the run-up to its definitive judgement yesterday, there had been no suggestion the court — which Chancellor Angela Merkel has always had to take into account in her decisions on European policy — would deviate from the line it has taken so far.
In a separate ruling last month, however, the court for the first time passed a case up to the European level, the Luxembourg-based European Court of Justice (ECJ). At issue was the European Central Bank’s OMT bond purchase programme, which eurosceptics had argued overstepped the central bank’s mandate and was tantamount to printing money. In the court’s opinion, “there are important reasons to suggest that it goes beyond the ECB’s monetary policy mandate and infringes on the powers of the member states and contravenes the ban on monetary deficit financing,” it argued.
Nevertheless, the court said it “believes it is possible” that limitations could be applied to the OMT programme in such a way as to make it compatible with EU law.
The constitutional court will issue its judgment on the OMT after the ECJ makes its ruling, not expected before mid-2015. But observers said the ECJ as a European body was unlikely to overturn an anti-crisis measure that has been instrumental in restoring calm to the markets.
Analysts welcomed the constitutional court’s final ruling on the ESM. “The decision removes remaining uncertainty about the ESM, which is an important part of the eurozone financial stability architecture,” said Berenberg Bank economist Christian Schulz.
“But the €500bn ESM is not big enough to defend large countries like Italy against market turbulences,” he cautioned, saying it had been the ECB’s OMT programme which had brought the single currency area back from the brink of a possible break-up of the euro.AFP
