German court to rule on eurozone aid next month

23rd August 2011, Comments 0 comments

Germany's constitutional court said Tuesday that it would deliver a keenly awaited ruling on September 7 on financial aid to Greece and the eurozone rescue fund.

Any rejection of aid by the country's highest tribunal would be a major setback for the latest proposals to ease pressure on Greece and other heavily indebted eurozone countries.

The court, which is based in Karlsruhe, southwestern Germany, will determine whether aid from Berlin conforms to European treaties and the country's own Basic Law.

The European Union's Maastricht Treaty, which serves as a framework for the 17-nation eurozone, has barred financial bailouts by one member for another but the Greek debt crisis has forced the bloc to reconsider its rule book.

Observers do not expect the court to declare that past and planned rescue programmes are illegal, but judges could increase the German parliament's oversight powers, making approval of controversial clauses more difficult.

In testimony before the court, Finance Minister Wolfgang Schaeuble said that aid to Athens, Dublin and Lisbon was not only necessary but also in accordance with German law.

Chief justice Andreas Vosskuhle has said the court seeks to "define limits that the law sets for politicians," in matters of financial aid.

It is also to determine the legality of the future European Stability Mechanism (ESM), which is to serve as a permanent financial rescue programme from mid-2013.

Germany is the biggest eurozone economy and also the biggest contributor to eurozone rescue packages, accounting for 27 percent of the total.

© 2011 AFP

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