SALON

Wednesday, Sep 12, 2012 9:00 AM UTC

German court rejects calls to block ESM fund

By

Topics: From the Wires,

KARLSRUHE, Germany (AP) — Germany’s high court on Wednesday rejected calls to block the Europe’s permanent rescue fund, paving the way in a much-anticipated ruling for its ratification by the country’s president.

Investors breathed a sigh of relief that Germany’s highest court was not putting up a roadblock in a central part of Europe’s efforts to contain its near three year debt crisis. Stocks across Europe rallied strongly, the euro spiked to a four-month high of $1.2897 and the borrowing rates of troubled economies, such as Spain and Italy, eased further too.

Opponents had challenged Germany’s ratification of the European Stability Mechanism — a new, permanent €500 billion ($638.8 billion) bailout fund for the 17 countries that use the euro — arguing that it violated the country’s constitution. They had sought an injunction preventing the country’s president from signing the legislation into law.

Germany’s ratification of the ESM is key, because the fund cannot work without the country’s participation. Germany, as Europe’s biggest economy, is the number one contributor the fund.

The taxpayer-backed fund is crucial to the eurozone’s debt crisis resolution efforts because it can loan money to governments that can’t borrow otherwise, and markets had been nervously awaiting the ruling.

Federal Constitutional Court Chief Justice Andreas Vosskuhle said the case posed “special challenges” — not just because of the political significance of the ESM, but because the financial and political consequences of a possible delay were “almost impossible to estimate reliably.”

But, he said, the court’s “examination showed that the law with high probability does not violate the constitution.”

Still, he said Germany must get legal guarantees before ratification that the provisions of the ESM can’t be interpreted in such a way that Germany’s financial liability could be increased without the approval of Berlin.

Germany must also ensure that provisions in the ESM treaty demanding “professional secrecy” from fund employees don’t stand in the way of the German Parliament being informed in full about fund decisions.

Germany is liable for about 27 percent — about €190 billion — to the overall European bailout scheme of €700 billion, which includes the ESM and remaining money from the current temporary fund, the European Financial Stability Facility.

It was not immediately clear when the President Joachim Gauck would be able to sign the measure, which was already approved by Parliament.

Chancellor Angela Merkel was due to address lawmakers later Wednesday.

___

David Rising and Geir Moulson contributed from Berlin.

More David Mchugh.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 0 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

vote
Loaded terminology like "entitlements" and "welfare" skews the debate and alters America. How right-wingers use semantic tricks to kill government.
345 points346 points | 114 comments
vote
How right-wingers use semantic tricks to kill government -- "...much of the U.S. economic security support system consists of subsidies for the affluent in the form of tax breaks, like those for private retirement savings plans such as 401(k)s and private employer-provided health insurance."
64 points65 points | 3 comments
vote
Temple Grandin on DSM-5: “Sounds like diagnosis by committee.” When it comes to autism, Grandin argues we're paying too much attention to labels -- and not enough to individuals
36 points37 points | 2 comments
vote
Temple Grandin on DSM-5: “Sounds like diagnosis by committee.” When it comes to autism, Grandin argues we're paying too much attention to labels -- and not enough to individuals
34 points35 points | 3 comments
vote
Doug Henwood: Capitalism Thrives on Class Exploitation
36 points37 points | 4 comments

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations