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Tuesday 23 September 2014

German constitutional court upholds legality of ESM fund

Michelle Martin and Ilona Wissenbach

Published 19/03/2014 | 02:30

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Wolfgang Schaeuble, Germany's finance minister
Wolfgang Schaeuble, Germany's finance minister

Germany's Constitutional Court has upheld the legality of the eurozone's bailout fund, affirming a preliminary ruling made during the debt crisis in 2012 that gave a green light to the European Stability Mechanism (ESM).

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The court reiterated that the €700bn fund did not violate the rights of Germany's Bundestag, or lower house of parliament, to decide budgetary matters as long as it had sufficient oversight powers over the ESM.

"The result is clear: the constitutional complaint is inadmissible and, on top of that, unfounded," said Andreas Vosskuhle, the president of the court.

"Despite the liabilities assumed, the budgetary autonomy of the German Bundestag is sufficiently safeguarded."

The court said measures had been taken to ensure Germany's liability to the ESM was limited to €190bn, with any increase subject to a vote by the Bundestag. It also confirmed the legality of the "fiscal pact" for stricter EU budget discipline, championed by Chancellor Angela Merkel.

Finance Minister Wolfgang Schaeuble, who had represented the government during the hearings, said the final ruling "confirmed our course for securing the stability of the currency" and boosted confidence in the eurozone.

Among the record 35,000 plaintiffs were lawmakers from Chancellor Angela Merkel's conservatives and the opposition, and academics. They argued that the ESM amounted to an illegal transfer of sovereignty from Berlin to Brussels.

Peter Gauweiler, a Bavarian conservative lawmaker who was the most prominent plaintiff, said the lawsuit had succeeded in ensuring democratic controls of the ESM and limiting taxpayers' exposure to bailouts of over-indebted eurozone members states.

The threat to the Bundestag's supremacy in budget matters had "not been fully eradicated, but significantly reduced" by the verdict, Mr Gauweiler said.

Irish Independent

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