Germany Constitutional Court affirms Euro zone bailout

[JURIST] The Federal Constitutional Court of Germany [official website, in German] on Tuesday upheld [judgment, in German; press release, in German] the constitutionality of the European Stability Mechanism (ESM) [text, PDF]. This affirms the court's 2012 decision [JURIST report], which rejected a preliminary injunction to halt the implementation of the ESM and the fiscal compact, but which imposed a cap on Germany's contribution to the fund. The court stated that safeguards were put in place to ensure the cap remained at 190 billion euros, with any increase being subject to a vote [Reuters report] by the Bundestag [official website, in German]. The court also reiterated that the ESM did not violate the rights of the Bundestag to decide budgetary matters if the Bundestag is able to maintain sufficient power of oversight over the ESM. Despite the court's original 2012 ruling and Tuesday's affirmation, critics who want the ESM and fiscal compact to be subject to a referendum continue to argue that the measures are unconstitutional.

In July of 2012 the court heard arguments [JURIST report] over a claim brought in opposition to the ESM. Earlier, in June the court ruled [JURIST report] that the German Bundestag has the right to be heard on the European financial crisis, holding in a case initiated by the Green party that Chancellor Angela Merkel failed to notify the parliament early enough about plans for the ESM regarding its sister party in Austria. Although that decision did not have any effect on the 500 billion euro ESM, it increased the parliament's rights by requiring the chancellor's government to provide notice to the parliament as early as possible in the future. A previous ruling that gave the parliament similar rights over matters concerning the EU was issued in February. The country's constitutional court held [JURIST report] that the use of a parliamentary subcommittee to fast-track decisions related to eurozone bailouts is unconstitutional, instead requiring the entire Bundestag to overview such decisions. In September of 2011 the court ruled [JURIST report] that the parliament did not unconstitutionally impair its own ability to adopt and control the nation's budget, nor did it infringe on the budget autonomy of future parliaments.

 

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