Thursday

9th Jul 2020

German court: Parliament must not be sidelined in future bailouts

  • The court threw out the suits, but said that parliament needs greater oversight (Photo: Al Fed)

Germany's highest court on Wednesday approved the country's participation in the Greek bailout and eurozone rescue fund, throwing out suits attempting to bring a halt to the country’s participation in the first, €110 billion bail-out of Greece and the eurozone’s €750 billion rescue fund.

But the Federal Constitutional Court in Karlsruhe also said that the German parliament must have more say when it comes to agreeing further bailout packages.

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There can be no "automatic" payments, said court president Andreas Vosskuhle.

“[The ruling] should not be mistakenly interpreted as a constitutional blank cheque authorising further rescue measures," he said.

“Parliamentary decisions about taxing and spending are a central element of democratic self government under the constitution,” he added in his ruling.

“As representatives of the people, the elected members of parliament thus also need to remain in control over elementary budgetary decisions.”

The ruling was in line with most expectations. Few legal experts believed that the court would side with the team of eurosceptics, led by economist Joachim Starbatty, on the substance of their suit that European bail-outs have been unconstitutional.

Most did however predict that the court would insist that similar future decisions would require the authorisation of the Bundestag, a move that is likely to throw sand in the wheels of Europe’s attempts to react to market pressures rapidly without having to wait for the slow wheels of parliamentary processes to turn.

German chancellor Angela Merkel welcomed the ruling saying it confirmed her government's European policies.

"The Federal Constitutional Court said personal responsibility and solidarity, naturally with the absolute approval of the parliament, is the way," she said.

The European Commission said it had "taken note with satisfaction" of the court's ruling adding that the decision had "an important bearing" on the capacity of the eurozone to "surmount" the debt crisis.

Responding to the ruling, Jannis Emmanouilidis, an EU institutional expert with the European Policy Centre think-tank, said: "The Karlsruhe verdict does allow the EU to move on, especially since it is coupled with an increasing commitment in Berlin to a long-term solution of the crisis."

"The Court's decision will allow the rescue programmes to go ahead and provide the grounds for implementing the already- adopted instruments and measures aiming to enhance economic governance," he continued.

"But the most significant development in recent weeks and months is the growing realisation that all this will not be enough: either the euro zone moves towards a fully-functioning Economic and Monetary Union or one crisis will follow the other until maintaining the common currency becomes untenable."

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