Sunday, September 4, 2011

Leading European experts have said that, although the German Court is unlikely to throw out the bail-out policy, which would cause chaos across the eurozone, it is likely to set conditions on continuing German support for the policy. Matt Persson, of the think tank Open Europe, said: "The Court will almost certainly approve the bail-outs, possibly citing as a reason that monetary stability is a legally protected interest. However, the Court is also susceptible to public opinion and, in order to guard its reputation, could well demand more influence for the German parliament and lay down additional constitutional red lines in return for approving the bail-outs." It could also make moves towards fiscal union in the eurozone even more complicated, he said. Chancellor Angela Merkel has faced criticism for not seeking fresh democratic mandates for the millions of euros the German government has provided in support for the eurozone's struggling nations such as Greece and Ireland. "Injecting more parliamentary democracy into the eurozone crisis is clearly a good thing but it will also further limit European Union leaders' room for manoeuvre to deal with the crisis, which in turn could increase market uncertainty," Mr Persson said. "Unfortunately for the ECB, under such a scenario it would once again be forced to pick up the responsibility of lender of last resort, as the European Financial Stability Facility will be too inflexible and unresponsive to play that role." Judges in the Constitutional Court will decide on Wednesday whether Merkel was right to sign off on multi-billion euro bail-outs for floundering economies. Five German professors launched the lawsuit which, even if it fails, has galvanised lawmakers in Berlin to demand more say in decision making.

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