A verdict by Germany's top court that
may determine the fate of eurozone rescue efforts is to be handed
down as planned Wednesday after a call for a postponement was
rejected.
The German Federal Constitutional Court said it would deliver as
scheduled Wednesday morning its decision on the new 700-billion-euro
(895-billion-dollar) bailout fund - the European Stability Mechanism
(ESM).
The ESM was to have started operating in July, but its launch was
delayed by the court's deliberations. As the major contributor,
Germany's backing is needed if the new bailout fund is to come into
force.
The Karlsruhe-based court has been considering objections -
including one from 37,000 people - to the constitutional validity of
Europe's fiscal compact on budget discipline and the creation of the
ESM.
A decision to uphold the objections would not only be a major blow
to Europe's hopes for bringing the debt crisis to an end, but
undermine efforts that are gathering speed to avert an even deeper
recession in the eurozone.
German legislator Peter Gauweiler, who is critical of bailouts,
applied for a delay so the court could review an ECB programme for
limitless purchases of government bonds announced last week. But the
eight judges dismissed the suggestion.
A court spokeswoman said the judges had merely confirmed the
timetable and had not decided on Gauweiler's call to require the ECB
to abandon bond buying as a precondition for approving the ESM.
"We can't release any other information because the judges are
continuing their consultations," she said.
In other eurozone economic developments, Greek Prime Minister
Antonis Samaras assured the European Central Bank (ECB) at talks
Tuesday in Frankfurt that he would be "getting (Athens' economic)
adjustment programme back on track."
The ECB said in a statement that Samaras and top aides discussed
Athens' bid to slash spending with ECB President Mario Draghi.
"Both parties agreed that Greece has already taken significant
steps towards budgetary consolidation and economic modernization, but
that major challenges remain," the statement said.
Samaras assured the ECB "of his and his government's commitment to
getting the adjustment programme back on track and continuing the
necessary reforms for Greece to regain competitiveness and put its
economy and public finances on a solid footing."
Samaras told Greek reporters after the Frankfurt meeting that he
had praised Draghi's actions to bring stability to the eurozone "so
that the attacks by the speculators finally come to an end."
Separately, the European Union and the International Monetary Fund
recommended relaxation of Portugal's budget deficit targets, Finance
Minister Vitor Gaspar said in Lisbon. The two institutions agreed to
raise this year's target from 4.5 per cent of gross domestic product
to 5 per cent.
Also, Finnish Prime Minister Jyrki Katainen warned that Spain was
being hit by unfairly high interest rates, given its efforts to
reduce its budget deficit.
Financial markets were steady as the verdict neared.
The 30-share DAX, the main Frankfurt index, was up 0.2 per cent at
7,228 in the afternoon. The euro climbed on foreign exchange markets
to a four-month high of 1.2836 dollars.
The eurozone should avoid new financial rescue operations,
Finland's Katainen said in Madrid in a reference to the bailouts
granted to Greece, Ireland and Portugal.
Bailouts could be avoided through mechanisms such as the
possibility of the ECB buying debt on request, Katainen said during a
visit to Madrid. The Finnish premier also stressed the need for
"credible" measures and for strictly applying economic agreements.
Finland has been among the most reluctant eurozone members to help
financially troubled countries such as Spain.
At a joint press conference with his Spanish counterpart Mariano
Rajoy, Katainen said Spain's interest rates were unfairly high, given
its efforts to reduce its budget deficit.
Meanwhile, Chancellor Angela Merkel came under fire from the main
opposition party.
Senior Social Democrat Thomas Oppermann called the ECB programme
"undemocratic" and accused Merkel of the "peak of hypocrisy" because
a debt mutualization - a hot button issue in Germany - was being
carried out, effectively, in secret.
