The FINANCIAL -- Germany's
finance minister Tuesday warned the country's top court of "major
uncertainty" on the markets if judges ordered a delay in ratifying key
euro crisis-fighting tools.
"A significant delay of the ESM beyond July could mean major uncertainty on the markets," Wolfgang Schaeuble told the powerful constitutional court, referring to the EU's 500-billion-euro ($617 billion) rescue shield.
"The symptoms of the crisis would worsen, with negative economic consequences," cautioned the minister, as the court heard a raft of complaints against the ESM (European Stability Mechanism) and the European fiscal pact for greater budgetary discipline.
Germany's parliament passed the two pieces of legislation with a two-thirds majority on June 29 but the country's president has held off from signing them into law pending these challenges.
As EUbusiness reported, this has delayed the planned entry into force of the ESM, which 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.
But already the court's president Andreas Vosskuhle has hinted at a possible further delay, vowing a "reasonable examination" of the case.
Opening proceedings, Vosskuhle said: "Europe needs democratic constitutional states just as democratic constitutional states need Europe."
He said the court would not examine the constitutionality of the ESM and fiscal pact, but only decide whether to ask the president to delay signing the law pending a closer examination -- which would cause significant hold-ups.
"Even in an unusual crisis situation, the constitution should not go unheeded," he stressed.
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 to 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.
On Sunday, the president, Joachim Gauck, called on Chancellor Angela Merkel to explain her euro crisis strategy better to the German population, whose patience with bailing out weaker eurozone countries is wearing thin.
Nevertheless, a poll published last week showed that nearly 60 percent of Germans back Merkel's euro crisis strategy.
Germany's constitutional court has a history of strengthening the role of the parliament on European issues.
In February, it struck down a proposal to create a small "crisis cell" of deputies that could take quick and secret decisions on approving emergency aid, stressing that the whole parliament had to be involved.
And in a closely watched ruling in September, the court judged that the German parliament must have a greater say in future bailouts.
The impact of this ruling was clear on Tuesday as parliamentary sources said there would be a special session of parliament on July 19 to examine potential aid to Spanish banks.
Influential newsweekly Spiegel said the decisions "read like indictments of a chancellor who, in the judges' opinion, is ignoring the basic rules of democracy with her bailout policies."