Germany's highest court approves creation of rescue fund for crisis-hit eurozone countries

 

Berlin

Germany’s constitutional court today approved the ratification of a permanent rescue fund for crisis-hit eurozone countries in a landmark ruling which sought to defuse fierce opposition to the project by giving parliament the power to veto increases in the amount contributed by taxpayers.

The eagerly awaited verdict came after weeks of deliberation and legal opposition from a record 3,700 plaintiffs who had argued that the permanent fund – known as the European Stability Mechanism (ESM) – committed Germany to unlimited funding of ailing eurozone members.

But the Karlsruhe court’s chief justice, Andreas Vosskuhle, declared that the panel of eight crimson robed judges ruling in the case had “rejected the injunctions” as there was a “high probability” that the ESM was not in breach of the constitution.

The ruling was welcomed by all the parties in the German parliament apart from the reform communist Left party which was one of the plaintiffs. “This is a good day for Germany and a good day for Europe – Germany is once again sending a strong signal to Europe and beyond,” a visibly relieved Chancellor Angela Merkel told MPs. There was also relief on the currency markets, with the euro rising to a four month high against the dollar following the ruling.

Germany is the last country in the 17-nation eurozone which still has to ratify the ESM and few had expected the court to block its progress. While saying that the Germany can now ratify the fund, the Karlsruhe judges responded to the plaintiffs’ concerns by imposing a €190 billion cap on Germany’s contribution to the €500 billion ESM. The court ruled that any increases in the contribution would require parliamentary approval.

The court also ruled that a clause in the ESM treaty which seeks to keep the fund decisions confidential should not prevent Germany’s upper and lower houses of parliament from being fully informed about the fund’s activities.

The decision opened the way for Germany’s President Joachim Gauck to sign the ESM and the fiscal pact – the measure to enforce European budgetary discipline – into law. The ruling followed last Wednesday’s unveiling of European Central Bank (ECB) plans to buy up short-term government bonds of struggling eurozone countries, something which met with intense criticism in Germany.

But analysts suggested today that the Europe now had important tools at hand to deal with its crisis. “Within less than a week, the eurozone has finally received its long sought after impressive bazooka,” said Carsten Brzeski, an economist with the Dutch bank ING. 

The decision also amounted to a political boost for Angela Merkel who faces a general election in a year’s time. However, she still faces considerable opposition to her European policies from the German public and from within her own party. A recent poll conducted ahead of yesterday’s ruling showed that half of all Germans wanted the court to block the ESM.

Rebel conservative MPs have also become vociferous in their criticism of Ms Merkel’s backing for Greece and the ECB’s government bond-buying plan, which many eurosceptics see as a backdoor way to facilitate unlimited German funding for ailing eurozone countries.

“We can be very sure that this has not been the last decision of the German constitutional court,” Kai von Lewinski, a law professor at Berlin’s Humboldt University, said yesterday. “The ESM is safe but the role of the European Central bank is definitely not.”

News
people'It can last and it's terrifying'
Sport
Danny Welbeck's Manchester United future is in doubt
footballGunners confirm signing from Manchester United
Sport
footballStriker has moved on loan for the remainder of the season
Sport
footballFeaturing Bart Simpson
PROMOTED VIDEO
News
ebooksAn unforgettable anthology of contemporary reportage
New Articles
Olivia Colman topped the list of the 30 most influential females in broadcasting
tv
News
Kelly Brook
peopleA spokesperson said the support group was 'extremely disappointed'
News
The five geckos were launched into space to find out about the effects of weightlessness on the creatures’ sex lives
i100
Sport
Andy Murray celebrates a shot while playing Jo-Wilfried Tsonga
TennisWin sets up blockbuster US Open quarter-final against Djokovic
Life and Style
techIf those brochure kitchens look a little too perfect to be true, well, that’s probably because they are
Arts and Entertainment
Hare’s a riddle: Kit Williams with the treasure linked to Masquerade
booksRiddling trilogy could net you $3m
Arts and Entertainment
Alex Kapranos of Franz Ferdinand performs live
music Pro-independence show to take place four days before vote
News
news Video - hailed as 'most original' since Benedict Cumberbatch's
News
i100
Life and Style
The longer David Sedaris had his Fitbit, the further afield his walks took him through the West Sussex countryside
lifeDavid Sedaris: What I learnt from my fitness tracker about the world
Arts and Entertainment
Word master: Self holds up a copy of his novel ‘Umbrella’
booksUnlike 'talented mediocrity' George Orwell, you must approach this writer dictionary in hand
News
i100
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SQL Implementation Consultant (VB,C#, SQL, Java, Eclipse, integ

£40000 - £50000 per annum + benefits+bonus+package: Harrington Starr: SQL Impl...

SQL Technical Implementation Consultant (Java, BA, Oracle, VBA)

£45000 - £55000 per annum + Benefits + Bonus: Harrington Starr: SQL Technical ...

Head of IT (Windows, Server, VMware, SAN, Fidessa, Equities)

£85000 per annum: Harrington Starr: Head of IT (Windows, Server, VMware, SAN, ...

Lead C# Developer (.Net, nHibernate, MVC, SQL) Surrey

£55000 - £60000 per annum + Benefits + Bonus: Harrington Starr: Lead C# Develo...

Day In a Page

'I’ll tell you what I would not serve - lamb and potatoes': US ambassador hits out at stodgy British food served at diplomatic dinners

'I’ll tell you what I would not serve - lamb and potatoes'

US ambassador hits out at stodgy British food
Radio Times female powerlist: A 'revolution' in TV gender roles

A 'revolution' in TV gender roles

Inside the Radio Times female powerlist
Endgame: James Frey's literary treasure hunt

James Frey's literary treasure hunt

Riddling trilogy could net you $3m
Fitbit: Because the tingle feels so good

Fitbit: Because the tingle feels so good

What David Sedaris learnt about the world from his fitness tracker
Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Saudis risk new Muslim division with proposal to move Mohamed’s tomb

Second-holiest site in Islam attracts millions of pilgrims each year
Alexander Fury: The designer names to look for at fashion week this season

The big names to look for this fashion week

This week, designers begin to show their spring 2015 collections in New York
Will Self: 'I like Orwell's writing as much as the next talented mediocrity'

'I like Orwell's writing as much as the next talented mediocrity'

Will Self takes aim at Orwell's rules for writing plain English
Meet Afghanistan's middle-class paint-ballers

Meet Afghanistan's middle-class paint-ballers

Toy guns proving a popular diversion in a country flooded with the real thing
Al Pacino wows Venice

Al Pacino wows Venice

Ham among the brilliance as actor premieres two films at festival
Neil Lawson Baker interview: ‘I’ve gained so much from art. It’s only right to give something back’.

Neil Lawson Baker interview

‘I’ve gained so much from art. It’s only right to give something back’.
The other Mugabe who is lining up for the Zimbabwean presidency

The other Mugabe who is lining up for the Zimbabwean presidency

Wife of President Robert Mugabe appears to have her sights set on succeeding her husband
The model of a gadget launch: Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed

The model for a gadget launch

Cultivate an atmosphere of mystery and excitement to sell stuff people didn't realise they needed
Alice Roberts: She's done pretty well, for a boffin without a beard

She's done pretty well, for a boffin without a beard

Alice Roberts talks about her new book on evolution - and why her early TV work drew flak from (mostly male) colleagues
Get well soon, Joan Rivers - an inspiration, whether she likes it or not

Get well soon, Joan Rivers

She is awful. But she's also wonderful, not in spite of but because of the fact she's forever saying appalling things, argues Ellen E Jones
Doctor Who Into the Dalek review: A classic sci-fi adventure with all the spectacle of a blockbuster

A fresh take on an old foe

Doctor Who Into the Dalek more than compensated for last week's nonsensical offering