Days after Greece passed a euro 78-billion ($113 billion) austerity plan clearing the way for a second international rescue, Germany’s top judges are set to discuss the legality of the first bailout.
Germany’s highest constitutional court will hear oral arguments tomorrow in three cases challenging the country’s role in the Greek bailout and the euro-area rescue fund last year. The cases were filed by academics and a lawmaker who have unsuccessfully turned to the court before to try to block Germany’s participation in European Union treaties.
“The court has always been very critical on the European integration in its language — only to be rather conciliatory when it comes to the practical results,” said Axel Kaemmerer, a professor at Bucerius Law School in Hamburg. “The judges may lift their fingers to admonish the government about red lines that cannot be crossed, but in the end it won’t rain on its parade.”
While European leaders work on additional steps to avoid a Greek default, the Federal Constitutional Court in Karlsruhe will hear arguments over the two packages from May of last year. The cases target Germany’s share of the euro 110-billion in loans for Greece from euro-region governments and the International Monetary Fund (IMF) as well as participation in a separate euro rescue fund that sought to halt the spread of Greece’s debt crisis.
EURO 750 BILLION
The euro 750-billion rescue fund includes euro 440 billion in guarantees from euro-area governments, euro 60 billion comes from the European Commission — the EU’s executive arm — and euro 250 billion from the IMF.
Germany, as Europe’s largest economy, is the biggest contributor to the euro-region bailouts. Finance Minister Wolfgang Schaeuble is scheduled to appear in court to defend the plan. A German Finance Ministry spokesman declined to comment.
The plaintiffs include law professor Karl Schachtschneider, economists Joachim Starbatty, Wilhelm Hankel and Wilhelm Noelling, former Thyssen Chief Executive Officer Dieter Spethmann and Peter Gauweiler, a lawmaker from the Bavarian wing of Chancellor Angela Merkel’s Christian Democrats.
They argue the measures violate the German constitution and EU laws ranging from the right to protection of property to their right to democratic representation. The EU overstepped its powers by authorising aid which violates the “no bailout-clause” in governing treaties, the plaintiffs say.
EMERGENCY MEASURES
“Already the hearing is a success, because the court apparently believes that our case has merit and needs to be discussed thoroughly,” said law professor Dieter Murswiek, who represents Gauweiler. “We predicted last year that the government was wrong in arguing that the bailout is a one-time emergency measure. It couldn’t work and didn’t work — as we all see now.”
“The EU relies on a treaty provision authorising financial help to member states in cases of exceptional occurrences beyond its control and the legal discussion centers around whether that trumps the no-bailout rule,” Kaemmerer said in an interview. “I think the EU’s reading of the rule is viable and should prevail.”
The court’s agenda for the hearing includes as many admissibility issues as substantive law questions, indicating that the court is considering whether the case can be dismissed for procedural reasons.
MOVING HURDLES
“While the court has extended the leeway to sue over EU issues, here the plaintiffs can’t really show they are already now individually and directly affected,” said Christian Graf von Pestalozza, professor emeritus of constitutional law at Berlin’s Free University. “On the other hand, if a court wants to rule on the substance of a suit, it will do so and find a way to put any hurdles out of the way.”
The court normally issues rulings several weeks after a hearing.
The court last year rejected emergency bids to block Germany from taking part in the bailout while the suits were pending. Previous cases seeking to block German involvement in key EU measures were rejected, including one against the euro in 1998 and one against Germany’s adoption of the 27-nation bloc’s Lisbon treaty.
Still, portions of the ruling in the 2009 Lisbon treaty case forced the government to rewrite some national legislation.
“The court does take political sensibilities into account,” Kaemmerer said. “And, frankly, who can really say now whether the packages help or harm in the end? The court won’t ignore that veil of ignorance.”
