Eurozone: relief after German ruling

The judges ruled that aid package resolutions cannot be automatic and may not infringe on the decision-making rights of parliament. Aid packages have to be clearly defined, and members of parliament must be given the opportunity to review the aid and also stop it if needed, the ruling said. "The government is obligated in the cases of large expenditures to get the approval of the parliamentary budget committee," Vosskuhle said.

The court said that check and balance was needed to ensure parliament retained its sovereignty over the budget, which it described as a "fundamental element" of democratic self-determination.


Extrait de: German high court upholds bailouts, David Mchugh, The Associated Press, Wednesday, Sep. 07, 2011

Germany's high court on Wednesday upheld the country's participation in euro zone bailout funds, but ruled that parliament should be more involved in such decisions.

The ruling means that while Germany's agreement to take part in the financial rescue of Greece will not be affected, participation in future bailouts might become more complicated.

Presiding Judge Andreas Vosskuhle said even though the Federal Constitutional Court had rejected lawsuits arguing that Germany's participation had violated parliament's right to control spending of taxpayer money, it was not giving a rubber-stamp to the chancellor's office.

The verdict “should not be misinterpreted as a constitutional blank check for further rescue packages,” Judge Vosskuhle told the court.

In a rushed vote, Germany's parliament agreed to join in the May 2010 bailout of Greece to keep it from defaulting on its debts, and to back the €440-billion ($620-billion U.S.) European Financial Stability Facility with some €147-billion in loan guarantees.

Eurozone: relief after German ruling

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Germany’s powerful constitutional court has rejected a series of challenges to the eurozone financial rescue packages agreed last year for Greece and other debt-strapped members of the eurozone. Quentin Peel, chief Germany correspondent, says it is a good result for German chancellor Angela Merkel but the long term problems for the eurozone won't go away.  (1m 44sec

In future, Judge Vosskuhle said there should be greater involvement from parliament in such decisions.

“The government is obligated in the cases of large expenditures to get the approval of the parliamentary budgetary committee,” Judge Vosskuhle said.

The suits were filed by Conservative legislator Peter Gauweiler and a group of professors who challenged the bailout.

They argued that parliament's budgetary rights were undermined by the country's participation in the bailout packages, among other things.

Europe's response to the debt crisis has already been criticized as too slow, and additional requirements to consult parliament could slow the fund's reaction time to the crisis.

 

European leaders agreed to increase the bailout fund's flexibility at a July 21 summit, giving it the right to buy the bonds of financially weak governments, help recapitalize banks, and quickly loan money to countries before they get into a full-blown debt crisis.

But the changes have run into hurdles. Finland has demanded collateral from Greece for its contribution, leading to more negotiations, while a junior governing party in Slovakia says no vote can be held until December.

The ruling comes ahead of a vote in Germany's lower house of parliament at the end of the month on whether to increase the size and scope of the EFSF, which is widely expected to pass.


Extrait de: Eurozone: relief after German ruling, Financial Times, September 7, 2011

Something dreadful has not happened. Chinks of light in the eurozone debacle are hard to find. But the German constitutional court has delivered a smidgen of help with its ruling on Germany’s participation in the Greek rescue package.

As expected, the court dismissed eurosceptics’ claims that involvement with the package could threaten the country’s budgetary sovereignty and breach the German Basic Law. Anything else would have generated market – and political – chaos.

But the court did impose some conditions, strengthening the hand of the federal parliament. What was encouraging was the form in which it did this: rather than insist that the full Bundestag must agree before the government gives any guarantees, the court required prior approval only from the Bundestag’s budget committee. This comprises 41 MPs, with members of the ruling coalition holding a majority (22) of the seats.

Convening this committee, and taking emergency decisions at short notice, should be far easier than passing measures through the full plenary. As demonstrated often during the crisis, speed can be essential. Unwieldy processes are part of the problem – as European Union leaders who have attended umpteen emergency summits can attest. The risk of a European equivalent of the market rout that followed the defeat of the Tarp bank rescue bill in the US House of Representatives three years ago is now sharply reduced.

For the longer term, the conservative tone of the court’s decision is worrying, as is its emphatic statement that the Bundestag may not establish permanent mechanisms that would take on liability for other nations’ voluntary decisions “especially if they have consequences whose impact is hard to calculate”. Such language makes any notion of eurobonds harder to launch. But did anyone still think that these were a near-term possibility?