German court to make crucial Greece verdict

BERLIN - Reuters

German and Greek finance ministry missions are seen at a meeting in Berlin. EPA photo

Germany’s Constitutional Court said yesterday it would not postpone its long-awaited ruling on the legality of the eurozone’s bailout fund, despite a last-minute legal challenge by a eurosceptic lawmaker.

The court said it would go ahead with today’s ruling on the legality of the European Stability Mechanism (ESM) and the fiscal compact for budget discipline, whose implementation has been delayed for months by the German judges.

The Constitutional Court issued a brief statement saying the ruling today “will go ahead as scheduled,” meaning conservative lawmaker Peter Gauweiler’s last-minute challenge would not cause further delays.

The court in Karlsruhe did not go into the merits of his complaint, lodged at the weekend after the European Central Bank announced its plans for unlimited purchases of bonds of crisis-hit euro states to reduce their borrowing costs.

He argues that Germany should not ratify the ESM until the ECB rows back on the bond-buying plan which he sees as a threat to the German budget. The constitutional court should therefore possibly postpone its decision on the fund, he said.

German legal experts believe the court will approve the new permanent bailout fund and the budget deal, while possibly imposing tough conditions limiting Berlin’s flexibility on future rescues.

If the court did back the injunction request against the ESM and fiscal compact, it would have a devastating impact on bond and currency markets, pushing the 17-member currency zone deeper into turmoil by casting doubt on its ability to launch further rescue bids of heavily-indebted states.

Most German law professors do not expect the court to go as far as signaling that Germany needs to change its constitution and hold a referendum before it can take part in any further integration of the European Union or the currency zone.