We tend to like getting up early, but Wednesday is a special day.That’s because Germany’s Supreme Court — the Bundesverfassungsgericht — is going to decide on the legality of the ESM, Europe’s main bailout fund.
“Experts” roundly predict that the court will give the greenlight to Germany’s participation, ensuring that the fund comes into existence.
While it seems as though the ECB will be doing the heavy lifting in regards to backstopping governments, the ECB anticipates doing so in conjunction with the ESM, in the sense that any country that got this backstop would have to have outside supervision.
Spectators in the courtroom in Karlsruhe on Wednesday will see Vosskuhle in his scarlet robe and matching hat. He will rise from his seat on the judges’ bench — the fourth chair from the right — and in his usual tone, firm yet not loud, he will read out the judges’ verdict. There is no question it will be a historic one.
The judges of the Second Senate, which makes up one half of the Constitutional Court, are deliberating, in expedited proceedings, whether or not to impose a temporary injunction against Germany ratifying the European Stability Mechanism (ESM) and the so-called fiscal pact. If the judges block Germany’s participation in the ESM, even if just temporarily, it could send the euro into a tailspin. A new program to buy sovereign bonds, announced by the European Central Bank (ECB) last week, would also suddenly be of less value, since the program is supposed to be coupled with the ESM.
Far more likely is that the Constitutional Court will rule in the other direction, but this too comes with its own consequences. By approving the stability mechanism, even under strict conditions, the judges could be spelling the end of the Federal Republic of Germany as a self-determined state. If these treaties are ratified, Germany will be bound to them, caught in a system of liability that could sooner or later lead to a Europe-wide political union.
Seen from this point of view, nothing less than the future of Europe and the continued existence of Germany are riding on the words which Vosskuhle will utter on Wednesday. The Federal Constitutional Court runs according to the “power of eight,” in the words of Jutta Limbach, one of Vosskuhle’s predecessors, describing the eight judges who sit on each of the court’s two senates. The president’s vote on a verdict carries no more weight than those of a senate’s other seven members. Still, the president has an elevated role, both externally and internally. And Vosskuhle is aware of that power, as unpretentious as he may often appear.
As noted, the ESM is likely to pass constitutional muster (“They would have to incompetent to have got this far without behind the scenes conversations that make them 99pct sure it passes”, said one analyst to Business Insider) but the conditions imposed on Germany’s participation could still be interesting.
The ruling is at 10 AM German time, which means 4 AM Eastern Time.
Should be a fun morning!
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