Possible Setback for Bailout Plans: German Constitutional Court Halts Special Euro Panel

Germany's highest court has issued a temporary injunction banning the work of a new panel convened by the country's parliament to quickly green-light decisions on disbursement of taxpayer funds through the euro bailout program. The decision could lead to further delays in German decision-making in efforts to rescue the beleaguered common currency.

Justices on Germany's Federal Constitutional Court in Karlsruhe Zoom
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Justices on Germany's Federal Constitutional Court in Karlsruhe

Germany's Federal Constitutional Court on Friday expressed doubts about the legality of a new panel of lawmakers set up by the German parliament to reach quick decisions on the release of funds from the euro bailout mechanism, the European Financial Stability Facility (EFSF). The court issued a temporary injunction banning the nine-person committee in the Bundestag from taking any decisions on the EFSF's deployment of German taxpayer money.

The special committee was recently created in order to be able to provide a quick green light for EFSF aid in especially urgent situations in which it wouldn't be feasible to put the issue up for a vote before the full parliament. The decision from the court, located in Karlsruhe, could also slow down Bundestag approval of the further application of German credit guarantees within the scope of the euro backstop fund.

Peter Danckert and Swen Schulz, two members of parliament with the center-left Social Democratic Party (SPD), submitted their complaint on Thursday, expressing their concern that the nine-member panel might violate their rights as members of the legislative chamber.

The committee had been scheduled to convene its very first meeting on Friday. In September, Germany's highest court ruled that the Bundestag must be given a greater say in euro bailout decisions given the degree to which the common currency rescue could impose on parliament's right to create Germany's budget.

In response, the Bundestag on Wednesday moved to include provisions for parliamentary co-determination of positions taken by Germany on the euro bailout at European Union summits in Brussels. Under the multilevel process -- depending on their importance, urgency and confidentiality level -- decisions can either be approved by the entire 620-member Bundestag, the 41-person budget committee or the nine-member special panel.

'The Bundestag Cannot Be Replaced'

But the SPD members are contesting the law. "The Bundestag cannot be replaced by a nine-member committee on such important issues," Schulz told SPIEGEL ONLINE. Schulz argues that, at a minimum, the Bundestag's budget committee should be included in all decisions.

The politicians have based their complaint on expertise provided by the Bundestag's own research service, which advised that the special panel transfers responsibility to a few and hinders all members of parliament from participating in the shaping of policy.

On Wednesday, the Bundestag tasked the committee -- whose meetings are closed to the public and confidential -- with a supervisory role for the billions of euros in German taxpayer money that are being deployed by the EFSF. It includes members of all of the German political parties represented in parliament and includes an equal number of politicians representing the parties in government and those in the opposition.

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1. Who's in charge?
alfredmifsud 10/30/2011
As Jean Claude Juncker the PM of Luxembourg said, Germany is not the only country that has a parliament and for that matter a Constitutional Court? So why is the whole EU now at the mercy of not just the German Chancellor, but also the German Parliament and the German Constituional Court? Have we become all German now? Where does the EU Commission stay in all this? And where is the ECB in offering a monetary solution to the financial crisis. Nobody can do this better than the ECB, and their putting discipline on indivual countries who stray from the rules ( e.g. by not supporting their bond buying and by closing the discount windows to their banks) is less abrasive than having a German recipe for all EU. Nobody should forget that when in 2003 the ECB and the EU Commission tried to penalise France and Germany for straying away from the Euro rules, these countries used their political weight to change the rules and set a bad example for all the rest.
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