Bigger Delay to ESM: Court May Take Longer to Rule on Euro Measures
The German Constitutional Court may take several months, rather than the expected three weeks, to decide on a request that it issue a temporary injunction blocking measures to rescue the euro. Finance Minister Wolfgang Schäuble urged the court to hurry up Tuesday, warning that a delay could lead to a further market turbulence.
The German Federal Constitutional Court may take longer than expected to decide on a request by plaintiffs that it issue a temporary injunction blocking Germany from signing up to Europe's permanent bailout fund and the fiscal pact.
The slower-than-usual injunction procedure means a further delay in launching the 500 billion ($613 billion) European Stability Mechanism (ESM), which was to have gone into operation on July 1 but has been stalled by the legal complaints in Germany. Uncertainty about the court's verdict has raised doubts about whether Europe will get the extra firepower it needs to combat the debt crisis.
The German parliament ratified the treaties to launch the ESM and the fiscal pact on debt limits on June 29. But President Joachim Gauck has refrained from signing them into law while the court hears objections from politicians and academics who argue that the measures will infringe on the constitutional role of parliament to decide how taxpayers' money is spent.
Germany is not the only country that has yet to approve the ESM treaty. The fund will become operational as soon as member countries representing 90 percent of the fund's capital commitments have ratified it. Germany is the largest contributor, at 27 percent of the total, so the fund can't be launched without German ratification.
Schäuble Warns of Market Turmoil
German Finance Minister Wolfgang Schäuble told the country's top court on Tuesday that any significant delay in approving the EU's permanent bailout fund could fuel financial market turbulence.
"A considerable postponement of the ESM (the European Stability Mechanism bailout fund) which was foreseen for July of this year could cause considerable further uncertainty on markets beyond Germany and a considerable loss of trust in the euro zone's ability to make necessary decisions in an appropriate timeframe," Schäuble said."
Several complaints were filed with the court on June 29 after the ESM and the fiscal pact were approved by Germany's parliament, the Bundestag, and its upper legislative chamber, the Bundesrat.
Among the plaintiffs are the parliamentary group of the left-wing Left Party, the conservative Bavarian politician Peter Gauweiler and an association called "More Democracy," which has 12,000 co-plaintiffs.
cro -- with wire reports
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