Germany’s top court has ruled that a special parliamentary panel created to ensure the country could take quick action on Europe’s debt crisis when it needed to is “in large part” unconstitutional.
The Constitutional Court ruled Tuesday that the nine-member group, which meets in secret, cannot approve loans or credit lines for financially troubled countries like Greece. The panel was established so Germany, Europe’s biggest economic power, could act decisively to assist the 17-nation bloc that uses the euro to cope with the fallout from the continent’s governmental debt crisis.
The court’s president, Andreas Vosskuhle, said the panel retained the right to approve purchase of debt on Europe’s secondary financial markets.
“In the name of the people: Paragraph 3.3 of the May 22, 2010 law, regarding the adoption of a guarantee in the case of a European Stability Mechanism and the amendment of that law on the guarantee in the case of a European Stability mechanism of October 9, 2011, violates Article 38 Paragraph 1.2 of the Constitution, insofar as it is not only to be used for the purchase of government bonds which the EFSF issues on the secondary market. The application is rejected. Germany has to cover the cost of the plaintiffs.”
The court said that German decisions affecting its role in the eurozone’s bailout fund required broader parliamentary participation, either the full 620-member lower house or its 41-member budget committee. The ruling could hamper German Chancellor Angela Merkel in her effort to support completion of Greece’s new $172 billion bailout and elimination of more than half of the debt the country owes to private creditors — a $142 billion reduction.
German support for increased aid to the Athens government has been falling. Surveys show its populace overwhelmingly in opposition. Ms. Merkel won parliamentary approval Monday for the new Greek rescue, its second in two years, but 17 members of her ruling coalition voted against it.
The French news agency reported that eurozone leaders have postponed talks planned for later in the week to boost the continent’s rescue fund for future emergencies to $1 trillion. Agence France Presse said Germany was not yet ready to increase the size of the bailout account, but that Ms. Merkel would ultimately support the bigger fund.
Meanwhile, the Greek parliament moved toward a late-night vote to formally adopt sharp pension and wage cuts the government had already agreed to in negotiating the bailout and debt relief with European leaders.
But the austerity measures remain deeply unpopular among the the Greek populace. One tavern worker, Antonis Kalamaras, said he is very worried.
“Clearly we are worried about our income (being reduced), but also because the income of our customers is going to be reduced, as we are a simple tavern, our customers are not shipowners and politicians but wage earners, pensioners, workers and students eat here. My income will be cut, then the income of the tavern will go down, and so we will all go two steps backwards. No one understands what the point of these measures are, no one.”
