News Column

Top German Court Rejects to Postpone Ruling on European Stability Mechanism

September 11, 2012
Eurozone

A verdict by Germany's top court that may determine the fate of eurozone rescue efforts will be handed down this week as planned, judges said Tuesday, rejecting a call for a postponement.

The Federal Constitutional Court said it would deliver as scheduled Wednesday its decision on the new 700-billion-euro (895-billion-dollar) bailout fund - the European Stability Mechanism (ESM).

The ESM was to start 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 by the eight judges to uphold the objections would be a major blow to Europe's hopes for bringing the debt crisis to an end.

German legislator Peter Gauweiler applied for a delay so the court could review the European Central Bank (ECB) programme for limitless purchases of government bonds announced last week.

A court spokeswoman said the judges had not decided whether or not Gauweiler's application was valid, but only confirmed the timetable.

"We can't release any other information because the judges are continuing their consultations," she said.

Financial markets were steady as the verdict neared. The 30-share DAX, the main Frankfurt index, was down 0.1 per cent at 7,206 at midday.

Greek Prime Minister Antonis Samaras was scheduled to meet later Tuesday in Frankfurt with ECB chief Mario Draghi.

Meanwhile, Chancellor Angela Merkel came under fire from the main opposition party.

Senior Social Democrat Thomas Oppermann called the ECB programme "undemocratic" and said "the mutualization of debt is being approved in secret." He accused Merkel of the "peak of hypocrisy."



Source: Copyright 2012 dpa Deutsche Presse-Agentur GmbH


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