ESM challenges rejected by court
The Federal Constitutional Court in Karlsruhe dismissed the challenges to the €500bn ESM with only minor caveats to ensure the country doesn’t lose its voting rights on the ESM’s governing board.
The ruling is part of a complex web of challenges from academics and politicians to Germany’s role in the response to the EU debt crisis.
A related bid, targeting the European Central Bank’s OMT programme, was split off from the case earlier this year and referred to an EU court in Luxembourg.
The Constitutional Court had given a preliminary order in September 2012 allowing Germany to ratify the ESM under the condition that its €190bn contribution can’t be increased without legislative approval. The ESM was set up to bail out indebted euro-area member states to fight the bloc’s debt crisis.
“The ruling is a good decision for Europe and for Germany,” said Klaus Regling, the ESM’s managing director.
Germany must ensure its domestic budget laws allow timely capital payments to avoid a suspension of its voting rights at the ESM’s governing body, Judge Andreas Vosskuhle said.
The judges also cleared Germany’s participation in the fiscal pact, a deficit-control treaty designed to impose budget discipline on EU members.
“The court confirmed that our approach to secure the stability of the currency is constitutional,” German Finance Minister Wolfgang Schäuble said in a statement. “This strengthens credibility and creates confidence.”
Most of the challenges, including demands to order which body of parliament must approve ESM-related actions, were dismissed as inadmissible. “The principle of democracy requires that the German parliament remains the place where autonomous decisions on revenue and expenditure are made,” the judges wrote.
The liabilities Germany has to shoulder under the ESM would only be illegal if the country had to assume a payment requirement that wouldn’t allow lawmakers any leeway to use money for other policy goals.
Bloomberg
