Protests against EU rescues go to top German court

5th July 2011, Comments 0 comments

The German Constitutional Court opened hearings on Tuesday on complaints against bailout loans for Greece and European Union emergency funds, but the rescue money from Germany is likely to flow on.

The highest court in Karlsruhe, southwestern Germany, considered appeals against the government's decision to contribute to rescue funds for debt-laden Greece last year and the European Financial Stability Facility (EFSF) which was established a short time later.

The government's decision committed Germany to guaranteeing loans of up to 22.4 billion euros ($32.4 billion) for Greece and 211 billion euros for other eurozone countries.

A ruling is expected only in a few months, but questions posed by the court should indicate the issues it considers most pertinent, and it could bolster the German parliament by acknowledging additional supervisory powers, observers said.

The court will probably not, however, "lay down excessively restrictive provisions for the government," Commerzbank analyst Eckart Tuchtfeld forecast.

Germany's partners within the 17-nation eurozone will nonetheless follow the proceedings closely given a popular undercurrent of resistence to aid from the bloc's economic powerhouse.

A group of lawmakers within the Bundestag, or lower house of parliament, including within Chancellor Angela Merkel's conservative coalition, have become outspoken objectors for the discontent.

Some claim the rescue measures violate no bailout terms of the Maastricht Treaty, or the German Constitution, and Tuchtfeld said that the court could take issue with the fact that loan guarantees committed future budgets and therefore restricted the parliament's budgetary rights.

The court's ruling is also expected to consider Germany's participation in the European Stability Mechanism (ESM), a permanent rescue fund expected to replace the EFSF in mid 2012.

"We find ourselves on a path we cannot see the end of, and we want to know if this is the right path," said Joachim Starbatty, a university professor who was one of the first to file a complaint with the court.

Finance Minister Wolfgang Schaeuble argued in a statement to the court that Berlin had to stand alongside its eurozone partners, saying "a common currency cannot make it without solidarity among its members."

Himself a jurist by training, Schaeuble also noted that European treaties allowed for the possibility of EU member countries providing "mutual support" in times of trouble.

Although Tuchtefeld did not expect such a result, he warned that "if the court were to restrict the government's leeway to act, the consequences for the EU and the financial markets could be extremely serious."

© 2011 AFP

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