european union

EUROPEAN UNION | 07.09.2011

Germany's top court throws out anti-euro bailout lawsuit

 

Germany is now free to honor its eurozone commitments

Germany's constitutional court has ruled that Germany's contribution to the eurozone's bailout of Greece was legal. However, the court ruled that parliament must have a greater say in similar decisions in the future.

 

Germany's constitutional court ruled on Wednesday that the country's contributions to a European Union bailout fund for Greece were constitutional. A group of professors, along with a Christian Social Union parliamentarian, Peter Gauweiler, had brought the case to the constitutional court.

In May 2010, parliament approved Germany's contribution to an emergency aid fund for Greece as part of a eurozone bailout package. In total, Germany backed 170 billion euros ($240 billion) in loan guarantees for Greece.

Wednesday's decision found that this did not violate parliament's right to control spending of taxpayer money. The court also found no proof that the amount of the guarantees went too far in exceeding the limit of the budget capacity.

The constitutional court effectively rejected claims that Germany's participation in bailout packages would leave a large hole in the budget.

Place for parliament

However, the judges did say parliament's budget committee must have a bigger say in any future bailouts.

"The government is obliged to get the approval of the parliamentary budgetary committee in cases of large expenditures," said Presiding Judge Andreas Vosskuhle.

The ruling was a victory for Merkel's government policyThis will likely make it more difficult for Germany, and therefore Europe, to move quickly on future eurozone bailouts.

Speaking in a parliamentary budget debate hours after the constitutional court announced its decision, Chancellor Angela Merkel said the ruling was a confirmation of the actions of her government and was in line with its practice of balancing solidarity in the eurozone with responsible budget measures by each country.

She also said it reinforced the government's position that Germany should remain united with the rest of Europe.

"The euro guarantees a unified Europe," she said in parliament. "If the euro collapses, Europe collapses."

Victory for euro-backers

Pia Ahrenkilde Hansen, the spokeswoman for the European Commission, also praised the decision, which had been eagerly awaited throughout the eurozone.

She said the ruling "has an important bearing on the capacity of the Union and its member states to act, to surmount the sovereign debt crisis affecting certain member states."

Proponents of using bailouts to prop up debt-ridden nations like Greece, Ireland, or Portugal have argued that if those countries are allowed to financially founder, it could bring about the collapse of the euro.

Author: Matt Zuvela (AP, dpa)
Editor: Nancy Isenson

 

 

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