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Title: Debt crisis: German court delays eurozone's €500bn bail-out fund
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URL Source: http://www.telegraph.co.uk/finance/ ... zones-500bn-bail-out-fund.html
Published: Jun 22, 2012
Author: Bruno Waterfield
Post Date: 2012-06-22 17:18:55 by Capitalist Eric
Keywords: None
Views: 218
Germany's constitutional court has delayed the creation of a new €500bn eurozone bail-out fund as Angela Merkel faces a series of legal challenges to measures seen as critical for saving the EU's single currency. The legal block is embarrassing for the German Chancellor who expended large amounts of political capital in concessions to get the Social Democrat and Greene opposition to support the European Stability Mechanism (ESM) so it could enter into force on 1 July. The ESM is urgently needed to fight European debt contagion over the summer and is Germany's preferred option for a bailout of Spanish banks because it is more secure for lenders than the existing, smaller eurozone fund, the EFSF. Germany's parliament will ratify the ESM and the fiscal pact on 29 June after Chancellor Merkel was forced to offer the opposition new spending on growth and her full backing for a eurozone financial transaction tax in return for its support. But in a humiliating setback on Thursday, judges in the Bundesverfassungsgericht, the country's constitutional court ruled that they would need "at least three weeks" to consider the "complex" ESM's legality after the vote and before it was signed Joachim Gauck, the German President. "We assume that the president will, as he has done before, comply with this request, and that the court will therefore have enough time to conduct an examination," said a spokesman for the court, which is based in Karlsruhe. Debt crisis: German court delays eurozone's €500bn bail-out fund Germany's constitutional court has delayed the creation of a new €500bn eurozone bail-out fund as Angela Merkel faces a series of legal challenges to measures seen as critical for saving the EU's single currency. But in a humiliating setback on Thursday, judges in the Bundesverfassungsgericht, the country's constitutional court ruled that they would need "at least three weeks" to consider the "complex" ESM's legality, Photo: Reuters By Bruno Waterfield 5:47PM BST 21 Jun 2012 Comments The legal block is embarrassing for the German Chancellor who expended large amounts of political capital in concessions to get the Social Democrat and Greene opposition to support the European Stability Mechanism (ESM) so it could enter into force on 1 July. The ESM is urgently needed to fight European debt contagion over the summer and is Germany's preferred option for a bailout of Spanish banks because it is more secure for lenders than the existing, smaller eurozone fund, the EFSF. Germany's parliament will ratify the ESM and the fiscal pact on 29 June after Chancellor Merkel was forced to offer the opposition new spending on growth and her full backing for a eurozone financial transaction tax in return for its support. But in a humiliating setback on Thursday, judges in the Bundesverfassungsgericht, the country's constitutional court ruled that they would need "at least three weeks" to consider the "complex" ESM's legality after the vote and before it was signed Joachim Gauck, the German President. "We assume that the president will, as he has done before, comply with this request, and that the court will therefore have enough time to conduct an examination," said a spokesman for the court, which is based in Karlsruhe. Related Articles Debt crisis: as it happened - June 21, 2012 21 Jun 2012 Germany falters as eurozone slowdown deepens 21 Jun 2012 Greek govenment seeks two-year extension to bailout 21 Jun 2012 Debt crisis: Moody's to downgrade UK banks 21 Jun 2012 China manufacturing contracts for eighth month 21 Jun 2012 Norbert Barthle, a senior Christian Democrat MP, expressed concern at the delay. "Given the critical situation in Europe at the moment, you don't need much imagination to figure out how things would develop if we had a still-stand for several months," he said. The constitutional court is expected to eventually clear the ESM because the Bundestag parliament has an effective veto over any decision taken by it because MPs must first approve any new bailout and Germany has a blocking vote on the fund's board. But the fiskalpakt, also seen as key anti-crisis measures in the eurozone, is much more controversial in terms of Germany's constitution because it gives the European Court of Justice (ECJ) the powers to uphold and enforce budgetary limits if the German parliament tries to overturn or breach them. Critics of the fiscal pact will mount a legal challenge on 29 June because the German constitutional court's prerogative to oversee, and the parliament's powers to change the constitution can be overridden by EU judges under the pact. Judicial sources told The Daily Telegraph that a challenge on the ECJ's role would be "admissible" and "is under dispute" among judges and lawyers in Karlsruhe's the. Andrej Hunko, a Left-wing MP for Die Linke, will mount a legal challenge to the fiscal pact as soon as it is ratified, a move that will delay its entry into force for several months. "Our legal advice and understanding is that our legal argument does have some possibility of success," he said. "German budgetary policy cannot be determined by others."
But in a humiliating setback on Thursday, judges in the Bundesverfassungsgericht, the country's constitutional court ruled that they would need "at least three weeks" to consider the "complex" ESM's legality, Photo: Reuters
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