The world is awaiting a decision later this week from the German Supreme Court about whether the European bailout fund is constitutional.
But there may be a glitch.
Germany’s Constitutional Courtsaid it will examine whether to postpone its long-awaited verdict on the eurozone’s €500bn ESM rescue fund and the EU fiscal pact given a new legal challenge by a leading eurosceptic politician.
A spokeswoman told AFP the court would hold an emergency session on the latest challenge by Peter Gauweiler – a eurosceptic lawmaker from the CSU Bavarian sister party to Chancellor Angela Merkel’s conservatives – on Monday afternoon and make public its decision on Tuesday morning.
Indeed, there are now two court decisions that need to be made: As the court is being asked to rule on the legality of the ECB’s bond buying scheme.
A prominent German eurosceptic Sunday tabled a complaint against the European Central Bank’s new bond-buying programme at the country’s top court in a fresh bid to block the eurozone’s rescue fund.
Peter Gauweiler, a lawmaker from the CSU Bavarian sister party to Chancellor Angela Merkel’s conservatives, said the 500-billion-euro ($630-billion) new ESM fund should not come into force unless the ECB rows back on its new programme.
There’s no particular reason to think Gauweiler will succeed in blocking the ECB, but still nobody likes glitches.
And of course, nothing is gauranteed.
The FT’s Wolfgang Munchau has a good column up about how although the ECB is planning unlimited bond purchases, arch-nemesis Bundesbank President Jens Weidmann may be winning the ideological war.
It should be no cause of glee, let alone joy, because German isolation is about the last thing the eurozone needs. The day after the ECB’s decision, the German media eulogised Mr Weidmann for fighting against the infidels in the ECB. The consensus view among German commentators is that the ECB has lost its independence; that the German taxpayer will foot the bill; and that hyperinflation is around the corner. One commentator was appalled by the fact that Mario Draghi was ready to save the euro at any cost.
A poll published last week had 53 per cent of all Germans hoping that their Constitutional Court would block the European Stability Mechanism – and risk utter chaos. Even the parliamentary floor leader of the pro-European Green party is concerned about the huge fiscal transfers that lie ahead. Mr Weidmann may have isolated himself in the governing council, but not in his country. When he says that bond purchases border on an illegal act of debt monetising, he is expressing a consensus view among German economists, lawyers and politicians.
The same narrative will almost certainly have influenced the German Constitutional Court, which is due to announce its ruling on the ESM on Wednesday. Mr Weidmann also gave a very critical assessment of the ESM in his deposition to the court in July. I would caution readers not to take the court’s decision for granted. While I do not have the foggiest idea what the court will say, I am certain the ruling will not be based on, or even influenced by, fears of a negative market reaction, as so many commentators keep insisting it will be.
It should be an interesting week.
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