Markets brace for German court ruling on bailouts
Jittery financial markets were bracing for a landmark decision from Germany's top court Wednesday over the legality of EU bailout packages that could slow down Europe's ability to tackle future crises.
The Constitutional Court is poised to rule on a complaint by six eurosceptic professors and politicians that the 2010 bailout of Greece and subsequent setting-up of the EU's bailout fund broke EU and German law.
While most experts do not expect the court to slap down the bailouts, it could insist that Germany's parliament has a greater say in future aid deals, which markets fear will hamper authorities' room for manoeuvre.
"The Constitutional Court is highly unlikely to declare the government's decision in favour of additional euro aid to be unconstitutional," said Eckart Tuchtfeld, an analyst at Commerzbank.
"However, it will likely strengthen parliament's role versus the government," added the economist.
The decision comes weeks before the German parliament is due to vote on extending the mandate and volume of the EU's bailout fund, the EFSF, with Chancellor Angela Merkel facing a rebellion within her ruling coalition.
The bill is sure to pass, as opposition parties have indicated they will vote in favour, but 25 deputies from Merkel's centre-right coalition voted no or abstained in a test vote on Monday.
"We will get the majority," declared a confident Finance Minister Wolfgang Schaeuble in parliament on Tuesday.
The vote takes place on September 29 but the final wording of the bill will not be completed until the Constitutional Court has delivered its ruling, which is expected at 10:00 am (0800 GMT) on Wednesday.
© 2011 AFP