German court's ESM relief

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German court's ESM relief

German court's ESM relief
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Germany’s Constitutional Court has won high-level cheers for giving the green light for Berlin to ratify the future European Stability Mechanism (ESM) and a separate European pact on budget rules.

Politicians and analysts alike welcomed the decision by a panel of eight judges in Karlsruhe, as good news for Germany and good news for Europe.

It was a relief for euro zone leaders, notably Chancellor Angela Merkel. If the Court had ruled against the ESM it would have been bad for the common currency and complicated still further the zone’s three-year old debt crisis.

“Germany is sending a strong signal to Europe and beyond,” Merkel told the Bundestag. “Germany is seizing its responsibility as the largest economy and a reliable partner in Europe.”

The Court rejected a series of legal complaints designed to stop the launch of the 700-billion euro Stability Mechanism but insisted that parliament have a veto right over any future decision to increase the size of the fund.

The some 37,000 plaintiffs ranged from eurosceptics from Merkel’s centre-right coalition to Left Party hardliners against European integration.

They had sought to block the ESM on grounds that parliament’s sovereign right over budget matters was being eroded, handing more power to Brussels.

Head of the opposition Social Democratic Party Sigmar Gabriel supported the new measures. He said: “Parliament has the last word. That tells other EU countries as well that the parliamentary way of doing things cannot be dismantled by technocrats.”

Lending capacity to euro zone states in need will be 700 rather than 440 billion euros as in the EFSF (being phased out).

The court said German liability in the rescue fund must be limited to 190 billion euros unless the Bundestag consents.

Leader of The Left Party Gregor Gysi seemed pleased, saying: “If the judges’ conditions aren’t met, the EU treaties will not be constraining on Germany. The Germans’ responsibility has been limited and democracy has been reinforced.”

Germany is the only country in the 17-nation euro zone that has not ratified the ESM, delaying its activation until the first half of October.