Germany’s Supreme Court OKs European Bailout Fund
Germany’s supreme court has rejected petitions to block ratification of Europe’s $640-billion rescue fund, giving the go-ahead for a key element of European leaders’ strategy for combating the continent’s long-running debt crisis.
The constitutional court was petitioned by 37,000 Germans who argued that the European Stability Mechanism, or ESM, contravened the country’s constitution.
In what was viewed as one of the most important decisions in the court’s 61-year history, the justices dismissed the petitions but imposed some significant conditions on the use of the ESM, namely a limit to Germany’s liabilities.
The court ruled that a cap of 190 billion euros, about $245 billion, had to be set on Germany’s contribution before the ESM was ratified. If the German parliament decides to back further funds, it can still do so. But the court’s proviso will go some way to appease German taxpayers whose enthusiasm for the euro has waned significantly over their growing dissatisfaction that their money is being used to prop up debt-laden, reform-shy economies in southern Europe.