Germany’s top court began hearing challenges to euro crisis-fighting tools on Tuesday, in a process that could hamper Chancellor Angela Merkel’s efforts to tackle the turmoil.
The powerful Constitutional Court in the southwestern city of Karlsruhe will weigh a raft of complaints against the eurozone’s permanent ESM rescue shield and the European fiscal pact for greater budgetary discipline.
Germany’s parliament has already passed the two pieces of legislation with a two-thirds majority but the country’s president has held off from signing them into law pending these challenges.
This has delayed the planned entry into force of the 500-billion-euro ($615 billion) ESM that is designed to help countries battered by the debt crisis, as the mechanism cannot come into force without Berlin’s final ratification.
The court was expected to rule by the end of the month on whether the president should be permitted under constitutional law to sign the legislation into law.
Opening proceedings, presiding judge Andreas Vosskuhle said: “Europe needs democratic constitutional states just as democratic constitutional states need Europe.”
Already jittery financial market analysts were watching the court decision for more signs of uncertainty as politicians aim to tackle the debt crisis that has raged for more than two years.
The challenges have been brought by, among others: the far-left Linke party, a well-known eurosceptic from Merkel’s CSU bavarian sister party, Peter Gauweiler and a “citizens’ initiative” group called “more democracy.”
They argue that the parliament contravened the country’s founding law by agreeing to what they say is unlimited liability of the German budget for crisis-hit eurozone nations.
They also say that a delay to the final ratification of the two laws would not cause difficulties, especially as the fiscal pact is only due to come into effect next year.
A delay to the ESM would not deepen the crisis either, argue the plaintiffs, as the temporary rescue fund EFSF is already in place.
Defending the government at the hearing was Finance Minister Wolfgang Schaeuble.
