Brussels, 12/09/2012 (Agence Europe) - On Wednesday 12 September, the German constitutional court in Karlsruhe gave the expected go-ahead to German ratification of the European Stability Mechanism (ESM). The court ruling clears the way for the permanent eurozone bailout fund to come into operation by the end of the month. It has lending capacity of €500 billion and all aid for capitalisation of Spanish banks will be provided from the ESM. The ESM will be providing aid to Greece from now on. The funding commitments of the European Financial Stability Fund (EFSF) for Greece, Portugal and Ireland will continue until completion.
In Berlin, the German foreign minister Guido Westerwelle called it “a clever ruling in the pro-European spirit of our constitution.” The head of Eurogroup, Jean-Claude Juncker, has convened the first meeting of the ESM board of managers on 8 October 2012 in Luxembourg, on the fringes of the eurozone finance ministers' meeting. All that was needed was to dot the i's of the ruling, explained Jean-Luc Sauron, head of the Europe unit at the French “Conseil d'État,” to this newsletter. He pointed out the originality of the German approach in terms of giving new budget and financial powers to Europe for solving the crisis while elsewhere in the eurozone, particularly in France, this has not been accompanied by giving greater powers to the national parliament. This is the political hot potato right now, he said, namely the role of democratic control.
The case had been taken to the German constitutional court by German parliamentarians of conservative parties, citizens' groups and the far left, and the court ruled that the creation of the ESM complied with the requirement that budget sovereignty (and the treaty to boost budget discipline among 25 member states) should remain in the hands of the Bundestag. Unlike some of the plaintiffs, the supreme court judges rejected the argument that the ESM might be used for anti-constitutional financing of eurozone countries by the European Central Bank (ECB). Any aid from the ECB for struggling eurozone countries will be preceded by a formal request for aid being made to the ESM by the country in question.
Yes, but... The German judges have put restrictions on German financial aid, saying that Germany's contribution at this stage must not exceed its contribution to the ESM's share capital, which is €190 billion. Any increase in the contribution would only be possible with the endorsement of the two German houses of parliament, the Bundestag and the Bundesrat, which must be kept fully informed. (MB/transl.fl)