Euro bailouts legal, MPs needs more say: German court

7th September 2011, Comments 0 comments

Germany's top court ruled on Wednesday that aid for Greece and rescue packages for other eurozone countries was legal but said parliament must have greater say in any future bailout deal.

In a landmark ruling eagerly anticipated by jittery financial markets, the Constitutional Court in Karlsruhe, western Germany, said all "large-scale" future aid packages must be approved by the parliament's budget committee.

"The federal government is required to seek the approval of the parliament's budgetary committee before handing over guarantees," chief justice Andreas Vosskuhle said, reading out the judgement.

In addition, the court ruled that parliament must have "sufficient influence" over the conditions attached to future rescue deals, likely limiting Chancellor Angela Merkel's room for manoeuvre if new crises blow up.

It may not approve deals that could lead to an unforeseeable burden on future parliaments, the court also ruled.

Moreover, the judges insisted that parliament may not approve any deal that leads to a pooling of national debt, apparently ruling out the idea of "eurobonds."

Economists fear that requiring parliamentary approval for future rescue deals may slow down the process of helping debt-wracked eurozone nations, where rapid decisions to stem swift market moves are often required.

© 2011 AFP

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