Sunday 19 November 2017

Merkel did not consult parliament adequately on ESM but decision will not delay ratification - courts

Stephen Brown and Alexander Hübner

GERMANY top court said today Angela Merkel's government did not adequately consult parliament on setting up the euro zone's permanent bailout scheme, though the ruling is not expected to delay its ratification by Germany.

A government source, a legal expert and a member of Merkel's conservatives in the Bundestag (lower house) said Germany was still on track to vote on the European Stability Mechanism (ESM) and the "fiscal pact" for budget discipline in Europe by the end of the month.

"I see no concrete impact on the current parliamentary proceedings on the ESM and fiscal pact. There will be no delay in ratification," said Nobert Barthle, the parliamentary spokesman on budget affairs for Merkel's Christian Democratic Union (CDU) party.

"It is about the information that is given to the Bundestag in the future," and would not affect ratification, said the German government source.

A two-thirds majority is required in both houses to pass the ESM, which cannot come into effect as scheduled on July 1 without German ratification.

So far only four out of 17 eurozone member states have ratified the ESM, which requires 90pc of the capital base of the currency bloc to come into effect.

After the constitutional court in Karlsruhe announced its finding that the government had "violated the rights of theGerman parliament to be informed", the euro fell to a session low versus the dollar.

Germany's main opposition Social Democrats (SPD), whose support Merkel will need on the euro zone votes, welcomed the decision, which responded to a complaint from its Green allies.

Leading SPD MP Thomas Oppermann called it a "great day for parliamentary democracy. Euro rescue mechanisms must be more transparent and more accountable to the people".

This is not the first time a court ruling has intervened in Germany's involvement in European rescue mechanisms.

A constitutional court last year gave a bigger say to German lawmakers in the forerunner to the ESM, the European Financial Stability Facility (EFSF), obliging the government to seek the approval of the Bundestag's budget committee before agreeing to German participation in euro zone bailout operations.

Law professor Christian Calliess at Berlin's Free University said the latest ruling was different and would not impinge on Germany's ability to act in response to the euro zone crisis.

"The markets appear to be overreacting; this is not like the ruling last year on the EFSF," he told Reuters.

"This ruling is not relevant to the sovereign debt crisis in the euro zone," he said, adding that it mainly clarified to what extent parliament should be consulted in future.

© Reuters

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