Now that would have been a pleasant surprise if the elitists didn’t have the judges in their back pocket, wouldn’t it?
Related info (in German):
Heute war ein Schicksalstag für Deutschland und Europa. Der zweite Senat des Bundesverfassungsgerichtes erteilte der Klage der fünf Professoren Hankel, Nölling, Schachtschneider Starbatty und Spethmann gegen die Transferunion ein abschlägiges Urteil. Die bisher durchgeführten Rettungsmaßnahmen wurden für Rechtens erklärt jedoch eine deutlich Stärkung des Beschlußrechtes des Parlaments angemahnt. Prof. Dr. Schachtschneider ordnet das Urteil in einem Interview ein.
– Germany court finds European bailout constitutional (ABC News, Sep. 8, 2011):
Germany’s top court has ruled that the country’s participation in the bail out of struggling neighbours is constitutional. Germany has beared the large portion of Europe’s bailout bill. Some who oppose European economic integration were hoping to block any future bailouts.
– German court ruling complicates future European bailouts (Deutsche Welle, Sep. 8, 2011):
A decision by Germany’s top court that Berlin’s involvement in European bailouts was legal, led to gains on the markets. But as the eurphoria subsides, questions are being raised about the future.
Wednesday’s court decision, which found that Germany’s contribution to European bailout funds was legal, buoyed stock markets around the world.
For investors, the main thing was that a nightmare scenario had been avoided; for had the Constitutional Court ruled the bailouts unlawful, serious questions would have been raised about Germany’s contribution in the bailouts for Greece, Ireland and Portugal. The participation of Germany in the European Stability Fund could also have been placed in jeopardy.
– German Court Rejects Challenges to Euro Bailouts (New York Times, Sep. 7, 2011):
KARLSRUHE, Germany — Germany’s ability to come to the rescue of troubled European partners won crucial backing from the country’s constitutional court on Wednesday, a victory for Chancellor Angela Merkel that also provided at least a temporary reprieve for markets that had begun to worry that Europe’s common currency could collapse.
The ruling, which defied some expectations that the court would hamstring Mrs. Merkel, removed one obstacle to German leadership of Europe at a time when Germans are being relied on more than ever to figure out a solution to the debt crisis that has ensnared weaker members of the euro zone, including Greece, Ireland and Portugal. Stock markets in Europe and the United States recovered sharply on news of the court’s action.
Europe has swung from gloom to cautious optimism repeatedly during its financial crisis, and few analysts considered the ruling a decisive turning point. While the court did not require full parliamentary approval for future bailouts, it did mandate approval by a smaller panel.
But analysts say that confirmation of Germany’s leadership role could push Greece and Italy to make pledges of austerity in return for European help, and could also put pressure on Finland and Slovakia, two euro-zone members that have introduced obstacles to their participation in bailouts, to support the rescues.
“The ship is full-steam ahead on its determined course,” said Jürgen Matthes, who studies international economic policy at the Cologne Institute for Economic Research. “It will exert force on the other countries, not least Slovakia and Finland, when Germany can move ahead without obstacles.”
Italy also took steps on Wednesday to reassure markets, as the Senate approved the government’s multibillion-euro package of budget cuts and tax increases. That eased fears that Prime Minister Silvio Berlusconi would backtrack on promised budget measures to manage Italy’s towering debt.
Mrs. Merkel struck a confident note in speaking before Parliament, saying the ruling by the Federal Constitutional Court had “absolutely confirmed” her government’s “transparent” handling of Europe’s debt crisis in close consultation with Parliament. “That is exactly the path we have followed,” she said.
Had the court declared the bailouts unconstitutional, the repercussions for the euro and the fragile European banking system would almost certainly have been devastating. “If the euro collapses, so does Europe,” Mrs. Merkel said, adding that “Germany’s future is inseparable from Europe’s future.”
The court rejected three appeals against the legality of earlier bailouts, which have stirred a furious political debate among Germans. The suits had been brought by a coalition of German lawmakers, economists and business executives who argued that Germany’s participation in loans and support funds for Greece undermined Parliament and infringed on provisions underpinning the country’s democracy.
The court’s president, Andreas Vosskuhle, warned that the ruling did not represent a “constitutional blank check for additional rescue packages.” The court required the government to seek the approval of Parliament’s budget committee before making money available for future bailouts of European countries struggling under mounting debt.
That requirement could still hamper Mrs. Merkel’s ability to take quick measures, but it represented much less of a political hurdle than if the court had required approval by the full Parliament for each decision, which many analysts had predicted.
For now the chancellor seems more concerned with winning passage of the deal reached between European leaders in July to expand the bailout funds. Mrs. Merkel is hoping that the approval of the court, with its high public standing in the eyes of Germans, helps her put down a rebellion in her own coalition over the measure. The vote is expected on Sept. 29, and numerous legislators from her party have threatened not to support the increase, which would raise Germany’s share to about $297 billion.
The constitutional court, despite its distance from the capital, or perhaps because of it, is consistently found to be the most respected player in German government. Analysts say that Germans have a deep respect for judges and the judiciary, and the court has not been shy in wielding its power. It declared in a 2009 ruling on the Lisbon Treaty that it had jurisdiction to overturn European policies, rules and decisions it found unconstitutional.
“In Europe, there is no constitutional court stronger or more visible in the public sphere and political landscape than the German constitutional court,” said Matthias Herdegen, director of the Institute for Public Law at the University of Bonn. “Even those opposed to certain steps feel it is an organ that responds to their concerns and that’s an enormous contribution to the legitimacy of the German political process.”
Yet the very fact that the fate of the euro rested on the shoulders of eight judges in red robes in this southwestern German city served as a stark reminder of the splintered nature of decision-making within Europe that has allowed the crisis to fester and spread — and therefore why strong leadership is so desperately needed. Although decision-making is often viewed as a simple matter of coordination between Paris and Berlin, agreements can be derailed by even the smallest states.
Finland has thrown the Greek bailout into confusion by demanding collateral from Athens in exchange for new aid, forcing a flurry of negotiations. The speaker of Parliament in Slovakia has said that he would not bring the European bailout fund to a vote this month as planned, raising questions in the process over why a small, poor country like his should pay for the free-spending ways of the better-off Greeks.
At the same time the ability, and indeed the willingness of states like Greece and even Italy to rein in spending and get their deficits under control has been viewed with increased skepticism. That in turn reduces the appetite of rich states to guarantee more of their debts, even if the refusal jeopardizes the euro.
While the court may have signed off on the constitutional questions, other political hurdles remain in Germany. Voters in Europe’s largest economy do not want to pay to haul other countries out of their deficit woes.
“The court ruling removes a substantive obstacle, but there’s no doubt that the situation still looks pretty grave,” said Simon Tilford, chief economist at the Center for European Reform in London. The underlying problems of heavily indebted states and weak, undercapitalized banks still have to be addressed to find a long-term solution, Mr. Tilford said.
In Parliament, Mrs. Merkel renewed her opposition to the idea of jointly issuing debt in the form of “euro bonds” as a means of solving the debt crisis. “Euro bonds are the way to a union of debtors,” she said, calling the idea “the wrong answer.”
“That is why we will not go down this route,” she added.
Jessica Koch, an analyst at the Center for European Policy in Freiburg, Germany, said the decision was consistent with previous court rulings, requiring that “certain decisions on revenue and expenditure must remain in the hands of Parliament.”
“That is fundamental for the democratic state,” Ms. Koch said. “You can transfer competencies to a certain extent. You can’t transfer them completely.”