24th Oct 2020

Germany's top court to examine Greek bailout

  • The court will hear the complaints but a decision is not expected for weeks (Photo: Al Fed)

While the EU's struggles to deal with debt-ridden Greece have been a drama played out in Brussels and in Athens, a new front will open on Tuesday (5 July) when Germany's top judges consider whether last year's bailout was legal.

The constitutional court in Karlsruhe will begin hearing arguments in three cases challenging Germany's role in the Greek bailout and the euro-area rescue fund last year.

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Any decisions will only be taken in a few weeks, but the judges could ultimately find that Germany's participation went against the constitution.

Around 50 complaints about the bailout have been lodged with the court. The vast majority have been rejected with 15 remaining. Of these 15, three are now being formally heard.

The plaintiffs include law professor Karl Schachtschneider, economists Joachim Starbatty, Wilhelm Hankel and Wilhelm Noelling and Peter Gauweiler, a centre-right MP. All have previously filed complaints about aspects of Germany's EU participation.

Their main argument this time is that the aid has breached the EU treaty's no bailout clause.

"It violates the basis rules of the European treaties and the structural principles of monetary union - namely the ban taken on the liabilities of other states. The rights and the responsibilities of the European Central Bank have also been infringed," Schachtschneider told the Frankfurter Allgemeine Sonntagszeitung when explaining his reasons for the complaint.

The aid for Greece, according to the lawyer and longterm euro opponent, establishes a liability, debt and finance union which is a "decisive step to a European state".

"But policies are not allowed to dispose of Germany's statehood," he says adding that a "big question" will be the role of the German parliament - which greenlighted the Greek package. "Do we citizens have a right over whether the parliament acts lawfully or only if it acts at all?"

Germany, as Europe's paymaster, pays most of the €110 EU-IMF Greek bailout agreed last year and has the greatest national share of the €750bn rescue fund established to prevent the crisis from spreading further.

With the population increasingly against putting money towards eurozone rescues, chancellor Angela Merkel has been walking a political tightrope.

She has been caught between keeping Germans happy by talking tough on Greece and assuaging the markets who consistently doubted the political will behind the solidarity promises made to Athens.

Merkel came under strong criticism last year for what was seen as a market-jittering delay before she agreed to the first bailout. Her aides later said that she felt constrained by Germany's constitutional court.

The legal arguments in the court are set to centre around whether the EU was right in its use of an article that allows for help of another EU member state in case of exceptional circumstance.

The hearing, which is to be attended by German finance minister Wolfgang Schaeuble, comes just days after EU leaders agreed in principle to a second bailout of Greece, although the details have still to be worked out.

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